WASHINGTON (AP) — Congressional Republicans are greeting the one-year anniversary of President Obama’s financial overhaul law by trying to weaken it, nibble by nibble.
Wary of attempting to dismantle the entire statute and being portrayed as Wall Street’s allies — banks are among the nation’s most unpopular institutions — GOP lawmakers are attacking corners of it. They can’t prevail because they don’t control the White House or Senate, but they may be able to force some compromises on agency budgets, pressure regulators and influence some of Mr. Obama’s nominations.
Days ago, one Republican-run House committee approved bills diluting parts of the law requiring reports on corporate salaries and exempting some investment advisers from registering with the Securities and Exchange Commission. Another House panel voted to slice $200 million from Mr. Obama’s $1.4 billion budget request for the SEC, which has a major enforcement role.
Meanwhile, Senate Republicans are continuing a procedural blockade that has helped prevent Mr. Obama from putting Elizabeth Warren or anyone else in charge of the Consumer Financial Protection Bureau, which opens its doors in two weeks.
The law hurts “the formation of capital, the cost of capital and access to capital, and you can’t have capitalism without capital,” said Rep. Jeb Hensarling, Texas Republican and vice chairman of the House Financial Services Committee. “So Republicans in the House will be examining each and every one of the 2,000-plus pages” of the law, which he called “a job creator’s nightmare.”
Confident that Mr. Obama and the Democratic-controlled Senate can prevent the House from doing major damage, Democrats view the Republican drive as a political exercise — for now.
“It’s mostly setting a marker for the election — and it helps with their campaign contributions,” said Rep. Barney Frank, Massachusetts Democrat, who chaired the Financial Services Committee last year and was a chief author of the law. “But it also tells people in the financial community that if they win the next election, they’ll be able to undo it all.”
The financial industry leans Republican in its campaign contributions, but not overwhelmingly. Sixty-one percent of the $9 million that commercial banks gave federal candidates for the 2010 elections went to Republicans, while 54 percent of the securities and investment industry’s $9 million went to Democrats, according to the nonpartisan Center for Responsive Politics.
Democrats are using the GOP drive for their own fundraising.
In one email sent last week under Mr. Frank’s name soliciting money for House candidates, the party wrote that Republicans want to “bring back the days of unrestrained excess, deception and de-regulation of Wall Street.” The mailing called it “payback to their big contributors in the financial services industry.”
Mr. Obama signed the banking and consumer protection measure July 21, a keystone achievement that responded to the biggest financial crisis and most severe recession since the 1930s. It passed Congress with solid Democratic support and near-uniform GOP opposition.
Among its provisions, the law:
• Created the consumer protection agency to oversee mortgages, credit cards and other financial products.
• Established a body of regulators to scan the economy for threats to the financial system.
• Required banks to hold back money for protection against losses.
• Curbed the trading of derivatives, speculative investments partly blamed for the 2008 financial crisis.
• Gave the Federal Reserve powers to oversee huge companies whose failures could jeopardize the entire financial system.
Yet the law was just a start, since it ordered federal agencies to craft rules to enforce it. As of July 1, out of an estimated 400 regulations to be written, 38 are complete. That leaves 362 proposed, facing a future deadline or having missed due dates for completion, according to the law firm Davis Polk.
Republicans say the overhaul went too far and has saddled banks and other companies with requirements that harm their competitiveness. The House Financial Services panel alone has held more than a dozen hearings on the law, in part to underscore to administration witnesses that some provisions — such as forcing banks to hold back capital as a hedge against losses — will hurt business, according to the committee’s chairman, Rep. Spencer Bachus, Alabama Republican.
“What we are doing is rational; it is sensible; it is entirely practical; it is compassionate,” said Rep. Nan Hayworth, New York Republican, who is a tea-party-backed freshman on that panel. “So we are doing the right thing, and it behooves the Senate and the administration to follow suit.”
The highest-profile fight has been over Ms. Warren, picked by Mr. Obama to set up the new consumer bureau. Many Democrats and liberal groups want her to become its first director.
Following a May clash between Ms. Warren and a House subcommittee chairman, Rep. Darrell Issa, California Republican, who is House Oversight Committee chairman, plans to question Ms. Warren, a Harvard law professor and longtime consumer activist, at a July 14 hearing about her role in shaping the new agency.
Meanwhile, 44 GOP senators have promised to block a vote on any nominee unless the bureau is made “accountable to the American people” by replacing the director with a board of directors and giving Congress control over its budget. Forty-one senators can prevent a nomination from coming to a vote.
“You try to get leverage where you can. In the Senate, nominations are your leverage,” said Mark A. Calabria, who monitors financial regulation at the conservative-leaning Cato Institute.
On another front, Republicans want to cut the budgets of agencies that are supposed to enforce the overhaul.
Besides denying the SEC extra money next year, the House Appropriations Committee would limit the consumer protection bureau to $200 million, well below the $329 million Mr. Obama wants. The full House has voted to hold the Commodity Futures Trading Commission, which oversees derivatives, to $171 million, short of this year’s total and less than two-thirds of what Mr. Obama wanted.
Republicans cast the cuts as part of their deficit-cutting drive, but Democrats say the reductions are designed to obstruct the new law.
SEC Chairwoman Mary L. Schapiro said in a speech this spring that budget cuts would mean “an investor-protection effort hobbled.”
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