The Dodd-Frank cuts that don’t matter, and the ones that do
On Wednesday, Republicans on the House Financial Services Committee passed a budget that would cut $35 billion from the deficit by disarming key parts of Dodd-Frank.
The bill would eliminate the government’s ability to wind down failing financial giants through “orderly liquidation”—short-term, temporary support meant to prevent systemic problems and collapse. It would also force the new Consumer Financial Protection Bureau—currently funded by the Federal Reserve—to the appropriations process, which would allow future Congresses to restrain the agency through budget cuts.
Democrats argued the GOP’s proposed savings weren’t real and that this was an effort to repeal the financial regulation law under the guise of deficit reduction. “You’re basically using the budgetary process to gut Dodd-Frank,” said Rep. Carolyn Maloney (D-N.Y.).
While the proposal has kicked off a big partisan fight, the biggest changes under the bill have essentially no chance of passing the Democrat-controlled Senate. Instead, the more immediate threat to Dodd-Frank has emerged further under the radar through a series of highly technical bills that Republicans have quietly been pushing through, with some Democratic support.
In March, they passed two bills loosening derivatives rules with major Democratic support, and they’ve since moved onto more aggressive, but highly wonky, legislation rolling back the law. Such measures are unlikely to stir up the same kind of political firefight as a big budget battle, but they could ultimately prove to be more effective in changing Dodd-Frank, at least until the next changing of the guard in Washington.