Financial Services Regulatory Reform Update - January 16, 2011

As expected, little time was wasted in the 112th Congress before a bill was introduced to repeal the Dodd- Frank Wall Street Reform and Consumer Protection Act. This past week Rep. Michele Bachmann (RMN) along with her colleagues Rep. Todd Akin (R-MO), Rep. Darrell Issa (R-CA), Rep. Tom McClintock (R-CA) and Rep. Bill Posey (R-FL) introduced, H.R. 87, which is a one sentence bill to repeal Dodd- Frank. Although the bill certainly grabbed a lot of attention upon its introduction, it is unlikely that the legislation will pass the House, and it is all but certain that the Senate will not take it up. Of course, were either of these to miraculously occur, President Obama is guaranteed to veto the legislation and we cannot see how the measure would have passed with veto proof majorities, so we are confident in our prediction that Representative Bachmann’s legislation will not become law.

As reported in past ML Strategies updates, we anticipate that the more effective strategy for Republicans will be to withhold funding from the agencies that need to increase their budgets in order to carry out their mandated rulemaking under the Dodd-Frank Act. Also, it is worth noting that Rep. Issa, one of the cosponsors to Rep. Bachmann’s repeal, is the Chairman of the House Oversight and Government Reform Committee, and he has already outlined his intention to use the power of his committee to investigate certain aspects of the law. This effort, in conjunction with similar hearings lead by the House Financial Services Committee, will regularly bring many of the top members of the Administration charged with implementing Dodd-Frank before Congressional committees. The obvious goal of which is to slow down the implementation, and also to hopefully spotlight programs that the Republicans believe are politically unpopular in order to generate pressure for targeted rollbacks. This approach is much more likely to be successful than a single bill to repeal Dodd-Frank.

Please see full update below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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