Republicans want to roll back the landmark Wall Street reforms enacted in July, but tinkering around the edges may be all they can manage even if they make gains in the U.S. congressional election.
Analysts see little to no chance of a full dismantling of the law meant to prevent a repeat of the 2007-2008 financial crisis that set off the worst U.S. recession in generations.
But Republicans are targeting specific provisions, such as funding for a new consumer watchdog and limits on debit card fees that would put a crimp in banks' profits. On such narrow issues, they might get some traction.
The congressional oversight process, about to get going as regulators gear up for implementation, may lead to substantive tweaks to the complicated Dodd-Frank financial regulation law. As ever, bank lobbyists will be busy behind the scenes.
Here is a question-and-answer discussion of the issue:
HOW DETERMINED ARE REPUBLICANS?
Senior Republican senators, including Richard Shelby and Lamar Alexander, have told Reuters that making changes to the law will be a top priority after the Nov. 2 elections.
John Boehner, the House of Representatives Republican leader, has slammed Dodd-Frank and said it should be repealed.
Dodd-Frank was approved by Congress and signed into law in July by President Barack Obama. It came after months of debate in which Democrats overcame the resistance of Republicans and a swarm of lobbyists for the financial services industry.
Regulators are now fleshing out the details of the complex legislation by writing more than 240 rules and regulations implementing it. Lobbyists are working behind the scenes to influence that process, which is expected to take years.
WHAT COULD STOP A FULL REPUBLICAN ROLLBACK?
Even if voters decide next month to send more Republicans to Congress, Obama is not going anywhere and his veto would likely block any comprehensive attempt to gut the law.
Plus, the same procedural roadblocks that Republicans have made standard practice over the past two years in the Senate would be available to Democrats if they were in the minority.
"Repeal of Dodd-Frank is unlikely," concluded Capital Alpha Partners, a policy analysis firm, in a report last Tuesday.
HOW COULD REPUBLICANS CHIP AWAY AT DODD-FRANK
Using a number of tactics, Republicans could still try to undermine the bill after the election.
One might be to use the congressional appropriations process to strangle funding for programs mandated under Dodd-Frank. Another might be to enlist state attorneys general to file lawsuits against parts of the bill, possibly including a provision that limits debit card fees.
Republican wins at the polls could embolden regulators to soften the impact of the reform on the banking industry at the rule-writing level.
With more Senate votes, Republicans could try to force Obama to name more lenient regulators to key posts, and possibly keep his special adviser Elizabeth Warren from heading the new Consumer Financial Protection Bureau (CFPB) if he tried to name her to the post.
Finally, if Republicans can gain control of key House committees, their chairmen could throw so many time-consuming subpoenas, hearings and information requests at regulators that rule-writing for Dodd-Frank would slow down.
The Commodity Futures Trading Commission (CFTC), a small agency with a lot on its plate, could be vulnerable to this, as could the CFPB, still in its infancy.
WHAT ABOUT THE CONSUMER WATCHDOG?
The CFPB, as designed under Dodd-Frank, will be an independent unit inside the Federal Reserve, the U.S. central bank. The bureau will regulate mortgages and credit cards.
Under the law, the Fed will fund the bureau directly, but some Republicans want to force it to request funding each year from Congress through the appropriations process, giving lawmakers more influence over its scope.
Consumer advocates and other backers of the watchdog fear such a change would make the bureau a political football.
WHAT ARE OTHER TARGETS IN DODD-FRANK?
Early next year, the Fed must write rules for implementing three key parts of Dodd-Frank:
• The Volcker rule limiting proprietary trading by banks;
• A rule limiting banks' ability to count trust-preferred securities as Tier One capital;
• New limits on debit card transaction fees.
Dodd-Frank also called for new rules for credit rating agencies such as Moody's Corp and Standard & Poor's, leaving much latitude to regulators on the issue.
Republicans may push for new curbs on credit rating requirements in federal regulations but resist exposing the agencies to more legal liability, analysts said.
WHAT ABOUT HOUSING FINANCE REFORM?
A gaping hole in Dodd-Frank was its failure to fix the housing finance system in general and mortgage giants Fannie Mae and Freddie Mac in particular. Both are known as government-sponsored enterprises, or GSEs.
Lawmakers from both parties vow to address the GSE issue.
Look for more congressional hearings on Fannie and Freddie, with Republicans pushing to minimize government involvement in the sector and Democrats defending some continued form of government mortgage guarantees.
FBR Capital Markets said in a recent report that housing finance reform could take two years to complete, flagging as important a Treasury Department report expected in December.
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