BY Mary Kane
The battle over financial regulatory reform and consumer protection has been a heated one, with lobbyists on both sides digging in over shaping new rules for everything from derivatives to mortgages.
So with Republicans making big Congressional gains in this week’s election – and taking control of the House Financial Services Committee – consumer advocates are expecting even tougher battles ahead.
The fight is a crucial one, since the reform bill calls for hundreds of new rules and regulations, along with the creation of the new Consumer Financial Protection Bureau. The details of how those new rules are written and enforced, and how much power the new agency gets, will determine the eventual impact of the reforms on consumers and Wall Street alike.
Even before the new Republican House members take office, some have said they’ll target financial reforms or reduce funding for the Consumer Financial Protection Bureau. Influential California Republican Ed Royce, for example, already has vowed to subjugate the agency to banking regulators.
“If the Consumer Financial Protection Bureau can trump the safety and soundness regulator, you run the risk of creating the same type of environment that was created with the government-sponsored enterprises in which you created moral hazard in the system,” Royce said in a press release. “We need to address giving the regulators for safety and soundness the ability to trump the actions on consumer protection if they threaten safety and soundness. Safety and soundness has to be our fundamental concern.”
Scott Talbott, chief lobbyist for The Financial Services Roundtable, which represents top banks, dismissed the notion that the lending industry wants to roll back the reforms. Lobbyists are well into the process of hashing out the new rules called for by the law, he said.
“We want to work with the regulators to implement this in the right way,” Talbott said. “Right now, that’s our focus. And that is unaffected by the election results.”
Talbott, however, said the industry will continue to argue for what it considers reasonable rules. For example, the industry believes more studies are needed on the impact of the Durbin Amendment to the reform bill, which calls for regulating swipe fees charged by banks on credit and debit transactions.
Image by Pete Souza, The White House, via Wikimedia Commons