Rep. Barney Frank says financial reform "holding up very well"
July 13, 2011 | By Mark Schoeff, Jr. | email@example.com
Implementation of the Dodd-Frank financial reform law is stalled by lack of funding from Congressional Republicans as it approaches its one-year anniversary, Rep. Barney Frank, D-Mass., said at a July 11 Newsmaker,
Frank., ranking Democrat on the House Financial Services Committee, said the GOP has not made a frontal assault on Dodd-Frank because doing so would be politically dangerous in the aftermath of the financial crisis.
“It is still too popular,” Frank said. “I am struck, at least in public, how little advocacy there has been for substantial changes.”
The bill is “holding up very well,” Frank added. "So, they're coming at it sideways.”
The political atmosphere on Capitol Hill has changed since the bill was approved. Republicans took control of the House in the November elections and significantly increased their Senate minority.
Republicans have used their new leverage to try squeeze the budgets of the Securities and Exchange Commission and the Commodity Futures Trading Commission, Frank said.
“They have had an impact by having the SEC and CFTC underfunded,” Frank said. “That's a serious problem. I do not see this coming from the financial institutions. I see this coming from the ideology of the Republican Party.”
If the Democrats had maintained their House majority, they probably would have moved a supplemental appropriations package early in the year that would have provided about $200 million to the regulators for Dodd-Frank implementation.
The 849-page law mandates 400 rule making requirements and 73 studies, according to an analysis by Davis Polk Wardwell LLP. As of July 1, agencies have finalized 38 rules, proposed 121 and missed 26 deadlines.
“If [financial regulators] had been fully funded in February and March, we'd be a lot further along,” Frank said.
In June, the House Appropriations Committee approved a bill that would freeze SEC funding at its fiscal year 2011 level, $1.19 billion, which is $74 million higher than its fiscal 2010 appropriation, but $200 million less than the Obama administration's budget request.
The committee's Republican majority voiced concerns about the SEC's management of its operating budget, information technology procurement, renting of leased space and its ability to produce accurate financial statements. They also said that all federal agencies had to tighten their belts in an atmosphere of federal budget cutting.
Frank said that the law that bears his name will prevent another financial crisis like the one in 2008 that catalyzed the recession. He said the measure curtails risky loans, tightens derivatives regulation, increases consumer protections and ends financial institution bailouts.
“Yes, it is disruptive because we had to disrupt a rotten system, which collapsed,” he said.