Beneath the fracas on the fiscal cliff fight, the Republicans' Plan B proposal would check off many items on the GOP’s financial services wish-list, gutting core pieces at the heart of the Dodd-Frank 2010 reform law and terminating one of the administration’s main housing relief programs, under the radar.
The bill, which would extend Bush-era tax cuts for earners who make up to $1 million a year, would erode Dodd-Frank by cutting the controversial Consumer Financial Protection Bureau’s automatic funding from the Federal Reserve and subjecting it to the annual appropriations process.
Plan B would repeal a section of the reform law that gives federal regulators tools to unwind ‘too big to fail’ financial institutions, known as “orderly liquidation authority.”
The Republican proposal for addressing the fiscal cliff would check off another GOP banking goal of shuttering the Office of Financial Research, which is meant to churn analytical data from financial companies to help regulators identify and knock down emerging threats to the financial system.
The financial services measures in Plan B also include a provision to terminate the Home Affordable Modification Program, one of the administration’s main homeowner assistance programs.
In April, the House Financial Services Committee passed the same package of financial services provisions along with a flood insurance reform component as a way to come up with $35 billion in spending cuts. The package was rolled into the GOP-backed Sequester Replacement Reconciliation Act that passed the House in May.
But much of the savings from eliminating the “too big to fail” provision were attributable to a budget gimmick, by finding artificial savings, which National Journal reported at the time.
Outgoing House Financial Services Committee ranking member Rep. Barney Frank, D-Mass., plans to speak out in opposition to the measures, arguing it will undermine the stability of the financial system, by making companies considered too big to fail tougher to dismantle.
The House is expected to vote on Plan B later today but with the Obama administration already threatening to veto the bill, the measures are not expected to become law.
Still the repeated emergence of the Dodd-Frank provisions demonstrates continued pressure from Republicans to rollback financial reforms.