It's the one-year anniversary of President Obama signing the Dodd-Frank financial reform bill, and the controversial law remains, well, controversial, with the top Democrat and Republican on the Senate's Banking Committee taking to op-ed pages to defend and attack the law.
Sen. Tim Johnson, D-S.D., chairman of the Senate Banking Committee, fought back in a Thursday op-ed in The Hill against critics who charge that the new regulations are too expensive, arguing that those critics suffer a "strange amnesia," in which they forget the economic devastation the country recently faced as a result of Wall Street's irresponsibility, inadequate consumer protection, and the failure of financial regulators.
The costs of regulations will be "negligible" for Wall Street -- which, Johnson points out, has seen executive compensation grow over the last year -- and would pale in comparison to the price the country paid for failing to prevent the crisis, he said.
He addressed charges that Dodd-Frank was put together haphazardly, calling it "the production of a rigorous, thorough, transparent, and yes, bipartisan process." To critics who say the bill is too complicated, Johnson responded that "complex problems require complex solutions."
Finally, Johnson condemned critics who say the bill should be repealed but fail to offer alternatives.
Sen. Richard Shelby, R-Ala., the ranking Republican on the Senate Banking Committee, has some changes he'd like to see.
In a Wall Street Journal op-ed, Shelby attacked the Consumer Financial Protection Bureau, which opens its doors Thursday. The CFPB, created under the Dodd-Frank Act, was designed to protect Americans from unfair, deceptive, or abusive acts or practices by financial companies.
Shelby criticized the bureau's centralization of power in a single director and its lack of congressional oversight. He proposed three changes to the current CFPB setup: the establishment of a board of directors to oversee the bureau; subjecting the bureau to the congressional appropriations process; and allowing bank regulators to prevent the bureau from "endangering the safety and soundness of financial institutions."
Without those reforms, Shelby said President Obama’s nomination of former Ohio Attorney General Richard Cordray to head the bureau would be “dead on arrival” in the Senate. The CFPB’s power will be limited without a director in place.
Johnson called efforts to undermine Dodd-Frank “misguided and irresponsible.” Expect more infighting Thursday as the Senate Banking Committee brings the heads of all the federal financial agencies to the Hill to examine where the law stands and what its biggest implementation issues are.
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