Regulators Face Senate Panel Over Dodd-Frank Regulations Today

By | February 17, 2011

Republicans will escalate their push to delay and defund the Dodd-Frank Wall Street reforms on Thursday as top regulators appear before the U.S. Senate Banking Committee with a new chairman presiding.

Replacing Christopher Dodd, Democrat Tim Johnson will lead his first committee hearing amid calls by Republicans for a slow-down in Dodd-Frank implementation and an attempt in the House to cut funding for a new consumer watchdog.

For banks and Wall Street, the hearing will be another act in a long-running drama that analysts expect will lead to few, if any, changes in the landmark reforms approved last year in the wake of the 2007-2009 financial crisis.

“The fact that it’s Johnson’s first hearing is interesting and may provide clues about the direction of the committee,” said Brian Gardner, policy analyst at the investment firm of Keefe Bruyette & Woods.

“Republicans will argue in favor of extending implementation of (Dodd-Frank) … but these are timing issues and won’t affect the substance of the rules,” Gardner said.

Much more reserved than the voluble Dodd, Johnson is the senior senator from South Dakota. He has made clear that he plans to defend the sprawling bill named after his predecessor and Democratic Representative Barney Frank.

“Chairman Johnson will be active in ensuring that (Dodd-Frank) is implemented as planned,” said Edward Mills, policy analyst at investment firm FBR Capital Markets.

Aides said Johnson will likely raise questions at some point, however, about limits imposed by Dodd-Frank on debit card fees. South Dakota is a credit card business hub.

A separate hearing on the card fees rule will occur on Thursday in the House Financial Services Committee, which is now under Republican control. [ID:nN16213607]

Testifying before Johnson’s committee will be Federal Reserve Chairman Ben Bernanke and the heads of the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Comptroller of the Currency’s office.

The Fed, the SEC and the CFTC must put into practice hundreds of new rules stemming from Dodd-Frank, written and passed by congressional Democrats and President Barack Obama over the fierce opposition of Republicans and Wall Street.


Bernanke said in prepared committee testimony obtained on Wednesday by Reuters that he supports Dodd-Frank and that the Fed is working to implement its rules in a timely manner.

With 2012 elections looming and campaign donations from the financial industry rolling in, Republicans are pressing to trim back Dodd-Frank at the funding and administrative levels. A legislative rollback is unlikely to succeed with the Senate and White House in Democrats’ hands.

The financial industry could win delays in implementation, said Joseph Engelhard, policy analyst at advisory firm Capital Alpha Partners.

“More time will be needed,” he said.

Senate Banking Committee Republicans issued a statement on Wednesday urging regulators to slow down.

“Regulators must not compound the mistakes of Dodd-Frank by promulgating uninformed rules,” Richard Shelby, the panel’s top Republican, said in the statement.

Frank and other House Democrats on Wednesday sent a letter, obtained by Reuters, to colleagues about an attempt by House Republicans to cut funding for the Consumer Financial Protection Bureau, another part of Dodd-Frank.

The CFPB is meant to shield consumers from abusive credit cards and mortgages. It will be housed within the Federal Reserve with funding from the Fed that is independent of the politically charged congressional appropriations process.

In a budget measure, House Republicans are proposing to cap at $80 million the amount the Fed may transfer to the CFPB, which aides said is slated for a $143-million budget.

Frank and fellow Democrats Brad Miller and Rush Holt said in their letter that they will offer a counter-measure to block the Republicans’ attempt to “handcuff” the CFPB.

(Additional reporting by Dave Clarke and Sarah Lynch, with Maria Aspan in New York; Editing by Tim Dobbyn)

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