Scarcely three months since President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law, “the process of implementation is moving swiftly and efficiently,” Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, said during a speech on Monday at the Securities and Financial Markets Association’s (SIFMA) annual conference in New York.
Regulators, Dodd said, are “making progress every day, promulgating rules, and taking their deadlines seriously.” It will be up to the next Congress, he said, to hold regular oversight hearings and keep the regulators on their toes.”
Dodd went on to say that “it’s important to preserve the integrity of the law, and not to repeal key parts of it as some have threatened, to preserve the confidence large majorities of Americans have expressed in the reforms, and the certainty which many within the financial sector have sought.”
But there’s no doubt that the new Republican-controlled House will indeed try to rein in parts of Dodd-Frank, particularly Rep. Spencer Bachus, R-Ala., who will likely be the next chairman of the House Financial Services Committee, replacing Barney Frank.
As Joshua Zive, an attorney with Bracewell & Guiliani in Washington, noted Bachus was “very critical of Dodd-Frank as it was being moved through the House.” Under Bachus’s leadership, Zive says, “there may be an opportunity to reform some of the aspects of Dodd-Frank that impose burdens on the financial sector, but deliver minimal benefits to consumers and the economy. There is virtually no aspect of the financial services industry that does not face new burdens under Dodd-Frank, and those burdens stem from an a variety of sources, including new reporting requirements, legal liability risks, or wholly new regulatory structures.”
Republicans in the House will also try hard to diminish the powers given to the Consumer Financial Protection Bureau. Dodd noted in his speech that Elizabeth Warren (left) “is doing some very good work as special advisor to Treasury Secretary Geithner, standing up” the CFPB. He said Warren, the Harvard law professor, is “already showing exactly the kind of innovative thinking that a 21st century agency will need–like using social networks and data mining to identify problems before they turn into crises.” However,
the CFPB still needs a permanent director, he said, and “I hope to see a nomination from the President soon. I emphasize ‘soon’ because the task is so large and the opposition so determined.”
The Office of Financial Research (OFR), which was set up to advise the Financial Stability Oversight Council, also needs “a strong and independent director,” Dodd said. In August, Dodd said he and six other members of the Senate Banking Committee sent a letter to Obama “urging him to nominate a director with the requisite experience to launch such an important new office, as well as the prominence to attract the top-notch economists, statisticians and researchers to make the office successful.”
The OFR was created, Dodd said, “because the financial crisis taught us that systemic problems cut across the traditional boundaries between regulators.” The ongoing foreclosure crisis, he continued, is a perfect example of the need for inter-agency cooperation because “it is a problem with no single cause, no simple solution, and touches on issues and companies within the purview of many different regulators.” Dodd said he will be holding a hearing next week on “the complex issues surrounding foreclosures.” The Financial Stability Oversight Council, he said, “should convene soon to consider the foreclosure crisis and coordinate a swift and effective response.”