Even though Congressional gridlock is bound to frustrate both parties, Republicans have wasted no time laying out their fiscal agenda. And this summer's financial reform, and generally the Democrats' policy toward Wall Street, is in the crosshairs.
The New York Times reports that the GOP, which now controls the House of Representatives, will also attack health care reform and will attempt to keep the Bush tax cuts for the wealthy. But because President Obama has veto power and the Democrats still control the Senate, the NYT notes, Republicans' most effective weapons against financial regulation won't be legislative.
In the words of John Boehner, the Ohio Republican and incoming Speaker of the House, the GOP will exercise "a significant amount of oversight," the NYT says, over the regulations that themselves are intended to oversee Wall Street. Even if the legislation remains intact, Republicans will have the power to influence how the specific rules, most of which have yet to be written, are implemented. These measures could include issuing subpoenas or holding hearings.
The Financial Times's John Gapper, who says the GOP's "ideas for overseeing banks lack credibility," offers those Republicans some advice: The best way to control Dodd-Frank is to leave the law untouched and influence its implementation.
Republican lawmakers have picked out specific targets. Rep. Spencer Bachus (R-Al.), who is a candidate to replace Barney Frank (D-Mass.) as chairman of the House financial services committee, said the Volcker rule, which limits (but does not ban) banks' ability to make trades with their own money, will "impose substantial costs on the American economy" and "may spark a mass exodus of clients from US banks to banks based abroad," in a letter obtained by the FT.
For his part, Paul Volcker, the former Fed chairman who conceived of the eponymous rule, wants its implementation to be as broad and airtight as possible, the Wall Street Journal reported last week.
Bachus attacked other parts of Dodd-Frank as well. "The derivatives provisions in Dodd-Frank alone... as they stand now they're going to take a trillion dollars out of our economy. Think how many jobs that's going to kill," he said, according to the FT.
As has been extensively reported, the use of derivatives, securities designed to hedge against risk, played a central role in causing and worsening the financial crisis. Back in 2003, respected investor Warren Buffett called them "financial weapons of mass destruction."
The GOP agenda will likely also include taking Fannie Mae and Freddie Mac out of government control and, due in part to the new influence of the Tea Party, preventing the U.S. debt ceiling from being raised.
And Senator Richard Shelby (R-Al.) might now be able to act on his distaste for the Consumer Financial Protection Bureau by limiting its reach.