House Financial Services Committee Chairman Jeb Hensarling (R-Texas) is convinced the Dodd-Frank financial reform law is a failure. And he’s confident the five years since its passage has yielded evidence to back up that assertion.
But what he lacks is a clear path forward for advancing legislation to fundamentally alter the sweeping Wall Street overhaul. The House has passed a host of bills tweaking the law in the last two Congresses, but similar efforts have stalled in the Senate as the White House has routinely threatened to veto effectively all efforts to revisit the measure.
{mosads}As the landmark law approaches its five-year anniversary later this month, Hensarling has embarked on a series of hearings he hopes will make the case the law is a threat to the economy and needs to be revisited. He also plans to continue pushing bills replacing sections of Dodd-Frank with GOP alternatives this year, with an eye toward a comprehensive overhaul sometime in 2016.
But he acknowledged that the current political climate makes it exceedingly difficult to actually change the law — and that if a Democrat wins the White House in 2016, it will present a “very, very tough mountain to climb.”
Instead, he argued that his panel’s efforts to revisit Dodd-Frank and advance other conservative financial policy goals deserve a longer perspective.
“A lot of the work that we’ve done in this committee, I don’t think will necessarily be realized in one Congress,” he said Thursday. “The left was working on ObamaCare before Obama was even born.”
Speaking to reporters, Hensarling argued that rigid Democratic ideology is to blame for the inaction on the Dodd-Frank front. He noted that the bill’s titular sponsor, retired Rep. Barney Frank (D-Mass.), has said a sweeping law will eventually need to be fine-tuned via technical corrections legislation.
But he said Democrats refuse to revisit the law for political reasons, as lingering anti-Wall Street sentiment and loud voices like Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) make the matter a political heavyweight among liberals.
“It is regrettable, but I think somewhere between brand protection and ideology, the nation is being hurt,” he said.
The House has advanced a number of bills to change or repeal portions of the law, and the Senate Banking Committee cleared a comprehensive financial regulatory bill in May on a party-line vote.
But ultimate success on financial regulation has been hard to come by for Republicans; the White House has held firm on any changes, and Democrats have largely been united in the same cause. The only time Dodd-Frank has been substantially changed has been when the tweaks were paired with must-pass legislation, like when rules barring banks from trading in financial derivatives were scrapped as part of a government funding bill at the end of 2014.
Of course, Democrats, including the White House, have contended that the GOP efforts to rework the law have largely been efforts to undercut it and render it less effective rather than improve it. Democratic lawmakers have even dismissed GOP efforts to provide relief to smaller banks struggling under the new rules, arguing their proposals are sops to large banks masquerading as community relief.
Now half a decade since Dodd-Frank became law, Hensarling said the future is muddy for the law, even as he vows to continue arguing it is a bad deal.
“Maybe a new president — I know a Republican would be far more receptive to ending the concept of ‘too big to fail,’ increasing consumer freedom than a Democrat, but I don’t know, maybe post-election more reasonable minds might prevail,” he said. “My crystal ball is a little fuzzy in that regard.”
But Hensarling believes that the passage of time since Dodd-Frank became law bolsters his case, which he believes will continue to get stronger.
“Now we have a five-year record … I think there’s a growing awareness among our constituents that this isn’t working,” he said. “There are major elements of Dodd-Frank that need to be replaced.”