Incoming House Financial Services Chairman Spencer Bachus (R-AL) told the Birmingham News this week that “in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.” And Bachus plans to provide that service by trying to slow down a whole host of measures being implemented under the Dodd-Frank financial reform law.
One of the targets that Bachus has in his sights is derivatives reform, the title of the Dodd-Frank law that aims to bring some prudent regulation to the currently unregulated derivatives market, which played a significant role in the 2008 financial meltdown. During the debate over Dodd-Frank, Bachus had an utterly incoherent position on derivatives reform, but that hasn’t stopped him from saying that derivatives reform is “one of the job-killing provisions of Dodd-Frank that needs to be addressed.”
And Bachus is getting some help from his fellow Republicans, who are threatening to bog down rule-writing by the Commodity Futures Trading Commission, which is charged with implementing derivatives reform. First, comes Rep. Scott Garrett (R-NJ), who will be chairing the subcommittee on capital markets next year:
“The rule-making bodies, especially the CFTC, seem to be eager to move along at this faster than anyone can keep up with,” said Mr. Garrett, who will try to slow the process with heightened congressional oversight.
And then Reps. Jerry Moran (R-KS) and Frank Lucas (R-OK):
Republicans on the panel said CFTC should move more slowly. Frank Lucas, who will become Agriculture Committee chairman in January, said he was “willing to consider an easing of statutory deadlines.” Jerry Moran, who will become a senator in January, said CFTC was rushing to issue a rule before it has adequate information on market size or appropriate limits.
Michael Greenberger, a former CFTC division director and University of Maryland law professor, called these complaints “a red herring offered by Wall Street to delay implementation.” But it’s not only Congressional Republicans who are trying to slow-walk reform. Republican appointees to the CFTC itself are doing the same thing, according to the Wall Street Journal:
The CFTC’s two Republican commissioners say the agency is moving too fast. Commissioner Jill Sommers said she supports giving the agency another year to write the rules.
The derivatives title is one of the strongest in the Dodd-Frank law, and getting it into place will bring much-needed light to a market that is several times the size of the entire U.S. economy. But Republicans, who did nothing to contribute to the financial reform debate, are trying to throw as many wrenches into the gears as they can, while Wall Street reaps its second-highest amount of revenue ever.