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The U.S. Chamber of Commerce releaseda letter this month outlining the changes it would like to see made to the Dodd-Frank Act, whose full implementation has been delayed for almost three years now. The chamber’s Fix, Add, Replace (FAR) agenda to alter Dodd-Frank insists that Congress’ already compromised attempt to avoid another financial meltdown is too ambitious. The law is failing, the chamber says, because it aimed to tackle too much.
“Trying to eliminate all risks and risk taking will hinder our ability to fund new ideas, startups, and expansion in our Main Street economy,” chamber President and CEO Tom Donohue wrote on the group’s Free Enterprise website. “Reasonable risk taking drives innovation, jobs and growth.”
The FAR plan advises Congress to “establish checks and balances for the Consumer Financial Protection Bureau,” which means the chamber wants bipartisan leadership at a regulator the group fears could be headed by someone like Massachusetts Sen. Elizabeth Warren or former Commodity Futures Trading Commission head Brooksley Born, both of whom are critical of Wall Street.
The chamber also wants to weaken whistle-blower laws that it believes “undermine strong corporate compliance programs” and to “streamline regulators through consolidation,” in essence downsizing regulatory agencies and banning mandatory audit firm rotations—a measure that prevents auditors from getting too comfy with the companies they oversee.
Finally, the chamber’s agenda aims to put a stop to “disincentives for investment” like the Financial Transaction Tax and to overturn Dodd-Frank’s Volcker Rule, which limits the kind of speculation that led to the 2008 economic meltdown.
The FAR proposal is targeting the vestiges of Dodd-Frank, which was mostly gutted last year when Republicans passed nine separate bills that left the act toothless. Further weakening financial reform, Reps. Eric Cantor, Paul Ryan and Spencer Bachus as well as other Republicans in Congress struck down measures that would have required big banks to put money in a Federal Deposit Insurance Corporation fund to be used for a bailout rather than relying on taxpayer money.
In addition to pushback from the chamber and legislators, Dodd-Frank’s rollout has been slowed by a team of lawyers headed by Eugene Scalia, son of Supreme Court Justice Antonin Scalia, so the attorneys have time to strike down the pillars of the act one by one. They forced lawmakers to redraw position limits, which regulate how much of the commodities market speculators can control, and delay the Volcker Rule’s implementation until 2014.
“I would hope the agencies are taking to heart the potential consequences for Dodd-Frank rules,” a threatening Eugene Scalia said of regulators in 2011 after winning a lawsuit that shot down the proxy rule, which would have made it easier for shareholders to nominate company directors and help prevent corruption and overpayment.
At one of those agencies, the Commodities Futures Trading Commission, regulators have been “scared into making rules and regulations that are weak or ineffective,” Commissioner Bart Chilton said last year in reaction to the backlash, “because we are overly concerned about what we call ‘litigation risk.’ ”
But the most recent blow to Dodd-Frank, as if it hasn’t suffered enough, is the sequester, which will weaken most regulatory agencies. The FAR effort is evidence of a financial sector that is unwilling to accept the most minor reforms. Even more disconcerting is that nothing is being done to improve a system that allowed the biggest economic collapse since the Great Depression. If all the mechanisms are the same, we should expect another collapse.