House bill chips away at Dodd-Frank Act

“[T]hey continue to seek every opportunity to defund, delay, and de-emphasize the law.” Those were the charges laid against House Republicans by Rep. Maxine Waters this week, as a new bill made the round through the House of Representatives. The proposed legislation, known as the derivatives bill (or, more formally, HR 1573), seeks to slow (and possibly stop) implementation of some parts of last year’s Dodd-Frank Wall Street Reform Act.

Though broadly popular with the American public, rules proposed by various agencies under Dodd-Frank in the past year have caused consternation among derivatives market players interested in preserving the status quo. This bill pushes back the finalization of those proposed rules eighteen months, from July to December 2012, requires the CFTC to conduct a cost-benefit analysis, and questions the necessity of open exchanges.

The bill has received broad backing from Republicans, but has drawn fire from many House Democrats, including Dodd-Frank namesake Rep. Barney Frank. He claims the derivatives bill as an attempt to bleed Dodd-Frank of momentum and forestall any significant changes in the financial services industry: “They want to prevent any substantive regulation of the derivatives market, which contributed so much to the financial crisis. The legislation the Republicans proposed is a re-deregulation of derivatives. It goes back to the good old days of 2010, when you could not have any limitation on derivatives activities.” Furthermore, CFTC Commissioner Bart Chilton has said explicitly that no delay is necessary.

Republicans fired back, alleging that the bill “will restore order to the rulemaking process”, that the CFTC had failed to adequately estimate the costs of the proposed rule, and that there was no need to rush such a delicate process on arbitrary the arbitrary whims of legislators.

The bill, though it may pass the House, is widely expected to die in the Senate.

Read more about this proposed Congressional legislation here and here.

Read the text of HR 1573.

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