Republicans are taking aim at the "unintended consequences" of the Dodd-Frank financial reform bill, including the rule that limits bank's abilities to make trades with their own money.
The House Financial Services Committee plans to overhaul any rules in the bill that may seek to regulate proprietary trading and derivatives, according to a draft plan obtained by Bloomberg News. House Republicans almost unanimously opposed the law last year, and their plans to limit controls on Wall Street may spring from lobbying efforts by firms like JPMorgan Chase and Bank of America, Bloomberg reports.
They also plan to take aim at the Volcker rule. Conceived by former Fed chairman Paul Volcker, it limits (but does not ban) banks' ability to make trades with their own money.
Congressman Barney Frank, (D-MA), a co-creator of the the landmark financial reform legislation which passed last year, said last week that the regulators were already underfunded, and that "Republicans are attempting to cripple regulation by failing to fund it," the Boston Globe reported.
"I had hoped it wouldn't be this way," Frank said at a press conference, according to the Globe.
The other author of Dodd-Frank, Senator Chris Dodd (D-CT) told CNBC that the law needs more examination.
"This is a complicated piece of legislation that obviously needs a good hearing, bringing in witnesses from the private sector to comment on," Dodd told CNBC.
"This is an opportunity for us to go back and look at this bill and make sure we achieved the very results we attempted in the last Congress," he added.
Bloomberg lays out the focus of the committee overseeing the implementation of Dodd-Frank:
Committee members will monitor regulators who are writing language to enforce the so-called Volcker rule limiting proprietary trading by banks to "ensure that it does not result in unintended consequences" for jobs and markets, according to the draft. The panel also will "examine whether federal regulators will impose margin and capital requirements" on non- financial firms that use derivatives to hedge legitimate business risk.
"The committee will assess the results of the implementation of the Dodd-Frank Act to improve those parts of the act that work well while changing those parts that do not," according to the proposal. The panel will "identify and remedy unintended consequences."
The draft obtained by Bloomberg announces plans to limit the reach of the new Financial Stability Oversight Council, chaired by Timothy Geithner, which is responsible for identifying firms that are "too big to fail." According to the draft, the panel will be: "monitoring among other things the extent to which its designation of systemically significant firms may create an expectation among market participants that the government will not permit these firms to fail."
The draft also discusses plans to "examine proposals to modify or terminate Fannie Mae's and Freddie Mac's statutory charters," following loud GOP requests that the government sponsored enterprises be privatized.
Bloomberg explains that President Obama is unlikely to approve any attacks on one of his signature laws, and Republican efforts will probably face opposition in the Senate where Democrats still hold the majority.