Congress Playing Chicken with Dodd-Frank Reform

According to a recent American Banker article, Senate Republican efforts to use reconciliation – a process that allows passage by a majority vote – to restructure the Consumer Financial Protection Bureau (CFPB) may derail any bipartisan agreement on targeted changes to the Dodd-Frank Act.

Dodd-Frank reform efforts could be in jeopardy before they begin in earnest if GOP lawmakers attempt to use the reconciliation process – which allows the Senate to pass changes to the budget by majority vote – to make changes to the CFPB, the article explains.

"Republicans face a strategic dilemma on that issue," said Ian Katz, a policy analyst at Capital Alpha Partners. "If they start off insisting that the CFPB be funded through the congressional appropriations process, the Democrats might not cooperate on other issues."

American Banker describes some observers' view of the situation as a legislative game of chicken. Republicans appear to be threatening to use reconciliation if Democrats refuse to come to the table and agree to at least some changes.

Recent remarks by President Trump have all but ruled out a full repeal of the Dodd-Frank Act, "We're doing a major elimination of the horrendous Dodd-Frank regulations, keeping some obviously but getting rid of many," Trump told reporters.

"The bankers in the room will be very happy, because we are really doing a major streamlining, and perhaps elimination and replacing it with something else," Trump said.

While there may be opportunities to revise Dodd-Frank, SFIG strongly believes that any revision to the law will require broad consensus from market participants. SFIG is engaging with members across all asset classes to drive constructive reform.

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