Top GOP Lawmaker Looks To Weaken Key Financial Reform Provisions After Soliciting Bank Donations

Earlier this week, Rep. Spencer Bachus (R-AL), who is in line to become chairman of the House Financial Services Committee if Republicans gain control of the lower chamber, was caught soliciting donations from the banking industry by promising to be easier on the banks than Democrats have been. In return, Bachus is taking aim at some of the crucial reform measures in the Dodd-Frank financial reform law that are supposed to rein in some of the risky practices of Wall Street’s financial behemoths.

First, via Salon’s Andrew Leonard, we have Bachus saying that he would repeal the provision giving the federal government authority to dismantle large failing financial firms:

Republicans would try to repeal the government’s new authority to seize and liquidate large troubled financial firms should they take control of the U.S. House of Representatives next year, a key lawmaker said on Thursday. Representative Spencer Bachus, who is in line to be chairman of the House Financial Services Committee under Republican control, said that section of the new Dodd-Frank financial law institutionalizes government bailouts of “too-big-to fail” institutions and puts taxpayers at risk.

And then MarketWatch reported today that Bachus may also have it in for the Volcker rule, which is meant to prevent banks from trading for their own account with federally insured funds:

Crowley [of the law firm K&L; Gates] predicts that Republican leadership in the House Financial Services Committee, the legislative panel responsible for overseeing the implementation of the Dodd-Frank Act, will hold hearings on the Volcker Rule and press regulators to limit costs to the industry as the agencies write the new rules…[Rep. Spencer] Bachus (R-AL), in July, unsuccessfully sought to amend the bank reform legislation with a provision that would have prohibited the Volcker Rule’s implementation unless other countries adopted similar measures.

These are provisions that give federal regulators key tools to both rein in the riskiness of the biggest banks and then liquidate those banks if they still get themselves into significant trouble (without relying on taxpayer dollars).

If Bachus does intend to bog down the implementation of Dodd-Frank, it seems like he’s going to have a receptive crowd of counterparts to work with. For instance, Rep. Jeb Hensarling (R-TX) has expressed a desire to defund the new Consumer Financial Protection Bureau and Rep. Scott Garrett (R-NJ) has said that he would limit funding for regulatory agencies like the Securities and Exchange Commission and the Commodity Futures Trading Commission in order to undermine Dodd-Frank.

Update:

Mike Konczal has more.