More On Legal & Compliancefrom The Advisor's Professional Library
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“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.” That’s what the new chairman of the House Financial Services Committee, Rep. Spencer Bachus, R-Ala., told the Birmingham News in a Dec. 9 interview—just a day after he was elected chairman. A pretty telling view of how Bachus intends to implement banking and regulatory reform of Wall Street through Dodd-Frank during his two-year chairmanship, wouldn’t you say?
The article goes on to say that Bachus tried to turn tail and clarified his comment to say that “regulators should set the parameters in which banks operate but not micromanage them.” But I’d say his first slip of the tongue leaves the most lasting impression.
Rep. Barney Frank, D-Mass., Bachus' predecessor said that Bachus' comments make two things very clear: First, "the assault he intends to lead against improved financial regulation based on a seriously flawed view of the relationship that exist between financial institutions and those who set the rules governing safety and soundness." And second, "Rep. Bachus' staff is going to be very busy getting him to retract statements in which he reveals what he really believes about a fundamental issue before the committee."
Frank went on to say that Bachus' view of regulation, "expressed before he 'clarified' his genuine belief, explains why he is so opposed to an independent consumer financial protection bureau, and why he wants to weaken restraints on speculation by banks with depositors' money."
Greg Valliere, chief political strategist at Potomac Research Group, says that while Bachus and Sen. Richard Shelby, the ranking GOP member on the Senate Banking Committee, have an “agenda to water down the financial services bill, nothing significant can get enactment because Obama” has the veto pen.
Bachus told the Financial Stability Oversight Council in a Nov. 3 letter that the Volcker Rule under Dodd-Frank, which would restrict U.S. banks from making certain types of speculative investments, was “a solution in search of a problem,” and that “regulators must implement the Volcker Rule in such a way that it does not unfairly disadvantage U.S. financial firms.”
Remember, too, that it was Bachus who wanted to give the Financial Industry Regulatory Authority (FINRA), oversight power over all brokers who become advisors during the conference committee on Dodd-Frank. Barney Frank had that amendment taken out, but the Securities and Exchange Commission (SEC) is due to deliver to Congress by Jan. 21 its report on fiduciary duty, and whether an SRO should help the SEC beef up its examination of advisors. FINRA continues to lobby for that SRO spot.