Ironically, one group that isn’t a fan of everything in Hensarling’s bill is Wall Street. To be freed from some rules, the legislation requires banks to raise hundreds of billions of dollars in new capital.
Hensarling also wants to do away with what’s known as Dodd-Frank’s orderly liquidation authority, which empowers regulators to wind down banks should they run into trouble. While Republicans argue that that part of the law didn’t resolve the fact that some Wall Street lenders remain too-big-to-fail, investors appreciate that it laid out a plan to prevent a collapsed bank from spreading contagion throughout the financial system.
Aspects of Hensarling’s bill that do have financial-industry backing: Its reduction in the frequency of burdensome exams that test whether banks can endure another crisis and its repeal of the Volcker Rule, which restricted banks from making speculative market bets with their own capital. The legislation also scraps the so-called fiduciary rule, which imposes tough standards on brokers by requiring them to put their customers’ interests ahead of their own when handling retirement accounts.
Because getting a bill through the Senate is so challenging, some Republicans have discussed trying to revamp Dodd-Frank via a complicated budget process known as reconciliation that doesn’t require support from Democrats.
The strategy, which is already being used to go after Obamacare, requires Republicans to show that provisions in Dodd-Frank are a strain on federal spending. The nonpartisan Congressional Budget Office has estimated that repealing the 2010 law’s orderly-liquidation authority regulators’ would save the government $14.5 billion.
This article was provided by Bloomberg News.