Correction: This article incorrectly quoted House Financial Services Committee Chairman Spencer Bachus (R-Ala.) as saying that several GOP-backed bills to alter the structure of the new Consumer Financial Protection Bureau would “remove unnecessary government roadblocks that are hindering an economic recovery.” Bachus has criticized the new agency, but that comment was directed at separate bills to amend other elements of the financial regulatory legislation passed by Congress last year.
Almost a year has passed since a Democratic majority in Congress responded to the financial crisis by passing sweeping legislation to tighten regulation of Wall Street, but the partisan conflict over the measure never ended.
Now, with Republicans in control of the House, the fate of the overhaul is again in play.
On Wednesday, splitting along party lines, the House Agriculture Committee voted to delay by 18 months implementation of rules governing derivatives, the kind of complex financial instruments that were blamed for putting the financial system in jeopardy.
The bill would require regulators to gather additional comments and further examine the potential downside of the rules.
Committee Chairman Frank D. Lucas (R-Okla.) said in a statement that he was trying to avoid rushed rulemaking. “We can’t ignore the concerns of businesses that we’re relying on to further our economic recovery,” Lucas said.
The ranking Democrat on the committee, Collin C. Peterson of Minnesota, said in a statement that Republicans were trying “to run out the clock” in the hope that one of their own wins the White House and then can water down the rules or preside over a repeal of the landmark legislation, known as the Dodd-Frank Act.
A key regulator said he opposed the bill. “Unnecessary delay in implementing the Dodd-Frank Act will increase risk to the American people and leave significant uncertainty in the marketplace,” Gary Gensler, chairman of the Commodity Futures Trading Commission, said in a statement.
That measure and others taken up Wednesday have little chance of becoming law, even if they eventually pass the House. They would meet stiff opposition in the Democratic-controlled Senate and almost certainly would face a presidential veto.
But Republicans have another powerful source of leverage: The fate of the regulatory overhaul could hinge on Congress’s willingness to fund the regulators responsible for implementing it.
On Wednesday, Gensler and the head of the Securities and Exchange Commission, Mary L. Schapiro, were on Capitol Hill pleading for their budgets.
The House has voted to roll back non-discretionary federal spending outside the realm of national security to below the fiscal 2008 level.It has not specified funding for individual agencies.
Schapiro told members of a Senate panel that reducing the SEC’s funding to that level would have a profound impact on the agency, forcing it to cut hundreds of jobs, bring fewer enforcement cases and suspend development of a system to help it field tips about possible frauds.
Gensler said that compared with the industry it oversees, the Commodity Futures Trading Commission is wielding a peashooter.
Sen. Jerry Moran (R-Kan.) said despite tight budgets, the CFTC has written rules that are “discretionary and unnecessary” and unsupported by economic research.
The partisan clash stretched from nitty-gritty regulatory debates of deep interest to industry insiders to high-level arguments framed for ordinary voters.
Sen. Richard J. Durbin (D-Ill.) connected a discussion of commodity futures regulation to high gasoline prices, and Sen. Frank R. Lautenberg (D-N.J.) said focusing on the costs rather than the benefits of regulation could lead to another financial crisis.
Members of the House Financial Services Committee on Wednesday passed a trio of GOP-backed bills to revamp the structure of the new Consumer Financial Protection Bureau, which is due to open in July. The measures would replace the bureau’s independent director position with a five-member commission, make it easier for fellow regulators to veto rules written by the bureau and prevent the new regulator from exercising its full powers until a permanent director is in place.
“The bills approved by the Subcommittee remove unnecessary government roadblocks that are hindering an economic recovery,” Chairman Spencer Bachus (R-Ala.) said in a statement. Bachus and other Republicans have opposed the bureau.
Democrats and consumer advocates dismissed Wednesday’s votes as little more than part of an ongoing effort to gut the far-reaching overhaul of financial regulation that Congress passed last year.
The Republican bills “will do little to help consumers — rather, they are attempts to cripple the CFPB before it has even opened its doors,” Rep. Carolyn B. Maloney (D-N.Y.) said in a statement.
Staff writer Brady Dennis contributed to this report.