But rhetoric has softened and bipartisan alliances have formed, leading some analysts to anticipate that meaningful legislation will be on the agenda next year.
“There is no repealing Dodd-Frank, but there will be efforts to eliminate duplicative parts of the law to avoid unintended consequences,” said Jaret Seiberg, senior policy analyst at Guggenheim Partners.
Republicans remain motivated to gut key statutes, as evidenced by the failed “Plan B” proposal to avert the fiscal cliff. GOP leaders tucked language into that bill that would have cut automatic funding to the Consumer Financial Protection Bureau and stripped regulators of the power to unwind “too-big-to-fail” institutions.
If the bill is indicative of things to come, critics say, polarizing ideology may continue to prevent lawmakers from working together on technical fixes to Dodd-Frank. They point out that the makeup of the House and Senate will generally be the same in the next Congress, raising fears that gridlock will continue.
“Until the Republicans have an opportunity to control the Senate, it’s very unlikely they will be proposing much reform legislation in the House,” said Peter J. Wallison, a senior fellow at the American Enterprise Institute. “Most of what will happen will be a studying of reforms, but no legislation.”
But there are signs that lawmakers have the political will to modify financial reform. Late Friday evening, the Senate unanimously passed a bill that would direct the Government Accountability Office to examine the economic benefits large banks receive for being “too big to fail.”
The bill, sponsored by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.), asks the agency to study whether institutions with more than $500 billion in assets enjoy favorable pricing of their debt because of inflated credit ratings built on the perception that the government will always step in to prevent their collapse. It’s unclear whether the House will take up the bill before the end of the session, but advocates of reform are encouraged by the broad support in the Senate.
Brown and Vitter are part of a small but growing group of Democrats and Republicans interested in exploring whether the nation’s largest banks need to be downsized to protect financial stability. Analysts say the addition of Sen. Elizabeth Warren (D-Mass.), the architect of the Consumer Financial Protection Bureau, to the Senate Banking Committee will strengthen the coalition.
In an interview earlier this month, Brown said he intends to reintroduce an amendment he had co-sponsored with then-Sen. Ted Kaufman (D-Del.) to limit the size and scope of bank operations. The Senate shot the bill down in 2010 by a vote of 61 to 33, but Brown said his colleagues have expressed interest in revisiting the measure.