When Dodd-Frank first became law one year ago, Republicans immediately began calling for complete repeal. Today, their strategy has shifted to a more nuanced attack that aims to delay deadlines for new regulations and gut agency funding needed to carry out the law.
For instance, Rep. Michelle Bachmann’s (R-Minn.) repeal bill, introduced in January, attracted only nine co-sponsors and is currently “languishing in a House subcommittee,” reports the American Banker. Ditto for a broad repeal bill in the Senate, where Republican Leader Mitch McConnell and Richard Shelby, the top Republican on the Senate Banking Committee, are now focusing on relatively small parts of the Dodd-Frank law.
Republicans have carefully framed their attack on the independent Consumer Financial Protection Bureau, the new agency which is supported by nearly three-fourths of Americans, according to a recent Consumer Reports survey. The CFPB, according to Republicans, should be overseen by a five-member board rather than a single director to increase the agency’s transparency.
“What we are asking for is not radical,” Republican Jerry Moran of Kansas said at a July 19 Senate Banking Committee hearing. “Transparency and accountability are our goals, goals that should be shared by every policymaker interested in protecting consumers from abuses of the past.”
Mortgage bankers criticized – In an attempt to avoid another mortgage meltdown, the Dodd-Frank law requires lenders to verify borrowers’ ability to repay loans, and orders banks to have more “skin in the game” when bundling risky mortgages into securities.
But mortgage bankers have balked at these rules, showing they have failed to learn from their past mistakes during the housing bubble, writes Gretchen Morgenson of The New York Times. “Mortgage bankers are leaning on the same tired argument — that saner lending requirements will undermine the goal of expanding homeownership,” she wrote, adding that the bankers are forgetting the enormous costs of risky lending.
Regulators should continue developing stricter rules that reign in subprime lending early on to avoid another “lending binge,” Morgenson wrote. “We all know the consequences — and surely do not need to repeat past mistakes.”
Elizabeth Warren’s swan song – Harvard Law professor Elizabeth Warren left her post at the Consumer Financial Protection Bureau last Friday, but not before sending a farewell letter the nearly 500 staffers that she had hired.
“I leave this agency, but not this fight,” Warren wrote. “The issues we deal with — a middle class that has been squeezed and business models built on tricks and traps — are deeply personal to me, and they always will be.”
Passed over by Obama for a spot as CFPB director, Warren will spend the next few weeks vacationing with family then return to Cambridge, Mass. She intends on returning to Harvard to teach, but is also considering a Senate run, The Huffington Post reports.