Democrats are preparing for a battle over President Trumps push to dismantle the Dodd-Frank financial reform law, which analysts said will be difficult to accomplish without bipartisan support.
House Democratic Leader Nancy Pelosi vowed Monday to take thecase to the public to try to build opposition to any effort to eliminate or water down protections designed to prevent a repeat of the 2008 financial crisis.
The president has moved to expose hardworking Americansto unfair, deceptive and predatory practices, perpetuating a massive con on those who thought he would stand up for them against the powerful interests, Pelosi told reporters.
Dodd-Frank, which was passed with almost no Republican support in the wake of the financial crisis, toughened capital requirements for financial firms,set up a powerful panel of regulators to watch for threatsand created the Consumer Financial Protection Bureauto oversee credit cards, mortgages and other financial products.
Trump signed an executive orderFriday ordering a review of Dodd-Frank, which he has vowed to dismantle.Republicans and businesses say the law has restricted bank lending and consumer choices.
After the signing, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said the move represented the beginning of the end of the Dodd-Frank mistake.
Althoughsome of the laws rules can be weakened by regulators appointed by Trump, key provisions cannot be eliminated without legislation. That sets up a looming political battle between the administration and congressional Democrats.
To get legislation through the Senate, Republicans would need the support of at least eight Democrats to break an expected filibuster. The chances of that dont look good right now, said Jaret Seiberg,an analyst with brokerage and investment bank Cowen & Co.
Democrats have promised to defend the 2010 law, one of former President Obamas signature accomplishments.
The lesson of history is that when faced with a danger like Donald Trump, opposition needs to grow. Most of all, opposition needs to be willing to fight, Sen. Elizabeth Warren (D-Mass.), an ardent supporterof Dodd-Frank, told theProgressive Congress Strategy Summit in Baltimore on Saturday.
Giveaways to giant banks so they can cheat people and blow up our economy again? said Warren, who came up with the idea for the consumer bureau. We will fight back.
Seiberg noted in a report Monday that even moderate Democrats boycotted last weeks Senate Finance Committee vote to advance the nomination of Steven Mnuchin to be Treasury secretary. Mnuchin, a wealthy Wall Street executive,would help lead the effort on an overhaul of financial rules.
If these trends continue, it will be hard to see the president driving legislation forward, particularly as it relates to reforming Dodd-Frank and providing banks with regulatory relief, Seiberg said.
Republicans could try to use the budget reconciliation process, which requires only a simply majority in the Senate,to make changes to Dodd-Frank regulations that affect federal spending and taxes.But that would limit how much of Dodd-Frank could be changed, Seiberg said.
For example, a reconciliation provision could eliminate the independent funding stream for the Consumer Financial Protection Bureau and subject it to the congressional appropriations process. But reconciliation couldnt be used to replace the bureaus single director with a bipartisan commission, which Republicans have advocated.
Likewise, Trump could not repeal the Volcker Rule, whichprohibits federally insured banks from trading for their own profit and limits their ownership of risky investments. Instead, Trump would have to try to change the rules provisions through the five regulatory agencies that are in charge of it.
Strong Democratic opposition to Trump so far means there are substantial obstacles to bipartisanlegislation overhauling financial, health and energy regulations, Goldman Sachs analysts wrote in a report Monday.
While we have not expected a sweeping overhaul of regulation in any of these areas to become law, recent developments lower the probability somewhat that even incremental changes could pass in the Senate, the report said.
On Friday, at a White House meeting with top corporate chief executives including Jamie Dimon of JPMorgan Chase & Co., Trump signaled his intention to rely on Wall Street for advice on reducing financial regulations.
Theres nobody better to tell me about Dodd-Frank than Jamie, Trump said before the meeting began, adding that we expect to be cutting a lot out of Dodd-Frank.
One of the administration officials helping to direct the overhaul of Dodd-Frank is National Economic Council DirectorGary Cohn, who recently stepped down as chief operating officer at Goldman Sachs. Mnuchin also used to work at the Wall Street investment bank.
Rep. Maxine Waters of Los Angeles, the top Democrat on the House Financial Services Committee, said Monday that Trumps campaign rhetoric about being tough on Wall Street amounted to a pack of lies.
Waters said Democrats on the Financial Services Committee have been willing to make minor modifications to the law. But she said they would not allow its key provisions, such as creation of the consumer bureau, to be demolished.
We listen very carefully to any concerns that are identified by community banks, even by the big banks, she said.
But, she added, Were not going to destroy Dodd-Frank.
jim.puzzanghera@latimes.com
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Democrats dig in to fight Trump's takedown of Dodd-Frank financial regulations - Los Angeles Times