House Republicans have begun legislation that would rollback pieces of the financial reform law known as Dodd-Frank. According to an Investment News article by Mark Schoeff (“Sen. Durbin Says Dodd-Frank Rollback Would Kneecap Regulators”), Assistant Majority Leader Dick Durbin intends to defeat or delay the legislation.
Hobbling Dodd-Frank means less investor protection against investment loss and securities fraud. Durbin, who chairs a Senate Appropriations Subcommittee on Financial Services and General Government, says it would also leave the U.S. vulnerable to another financial crisis.
In order to pay for implementation of Dodd-Frank, the U.S. Securities and Exchange Commission (SEC) received a funding increase of $74 million through September 2011—hardly enough to cover the costs. To compound the SEC’s funding predicament, the Republican House majority recently endorsed a $212 cut in the SEC’s budget for 2012.
Mary Schapiro, SEC Chairman, warned senators that such cuts would cripple the agency’s efforts to regulate financial organizations that pay more for their business’s technology operations than the SEC spends on its entire budget.
For Wall Street lobbyists and the firms that employ them, Republican efforts to derail Dodd-Frank and ax the SEC budget are good news. For American investors, it could mean another wave of investment loss.