The House passed a piece of legislation last week, the Promoting Job Creation and Reducing Small Business Burdens Act, which if enacted will delay or weaken a dozen provisions of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.
The White House has already issued a threat to veto the bill, reiterating the President’s strong opposition to measures that would weaken Dodd-Frank and declaring that his senior advisors would recommend a veto if it reaches the President’s desk.
However, the GOP controlled Congress has not run from Democratic opposition to its big bank friendly measures. In December, prior to taking control, Republicans used the threat of a government shutdown to force the repeal of one provision of the financial reform law, the swaps push-out rule. Despite a firestorm created by Senator Elizabeth Warren and the media in the days prior to the vote, the Republicans refused to relent and the Cromnibus bill was signed into law to prevent another government shutdown.
Even if the GOP can’t get the number of votes in the Senate to overcome the President’s veto of the bill, the Republicans will likely attach the measures to other legislation and spending bills to chip away at the banking reforms over the next two years.
These techniques are just the latest evolution of Republican tactics to protect business from regulation designed to protect consumers and the economy. When Republicans lacked control of both the House and Senate, they opposed Presidential nominations for government bodies and withheld funding to agencies in order to hinder efforts to implement the law. The IRS has been the latest victim of this tactic, seeing its funding cut in the latest government spending bill while it has been tasked with implementing the new law aimed at cutting down on international tax evasion. Previously, the CFTC had been the agency of choice for Republican opposition, with a budget so underfunded that it had a well documented effect on morale among the employees of the commodities regulator.
Following the stock market crash of 1929 and the Great Depression, the United States adopted a series of reforms to the handling of securities, including the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Company Act of 1940. These laws were designed to help protect investors and prevent instability in the financial markets. They are still the cornerstones of our nation’s securities laws fifty years later.
Dodd-Frank will reach its fifth anniversary this summer. When President Obama signed Dodd-Frank in 2010, he sought to reform the “antiquated and poorly enforced rules that allowed some to game the system and take risks that endangered the entire economy.” It is too soon to be rolling back the protections developed to protect the nation from another traumatic recession, or worse. The law hasn’t even been fully implemented yet.
The highly successful SEC whistleblower program was created by Dodd-Frank. If the GOP is able to gain momentum for undermining the law, would it take aim at this program next?