As the Dodd-Frank financial services reform bill snaked its way through Congress, Republicans, and some Democrats, did all they could to take some of the most aggressive and reformative provisions out of the bill. And they were largely successful as the final version of the bill offered only modest and incremental reforms in lieu of the sweeping oversight necessary to reign in Wall Street abuses.
But those opposing change on Wall Street are not done yet.
Congressional Republicans hope to gut regulators’ spending as of Oct. 1, the start of the government’s fiscal year. The move comes just as Wall Street regulators are charged with additional responsibilities through Dodd-Frank, such as overseeing the $600 trillion derivatives market.
Reform advocates and regulators warn the cuts will prevent agencies like the Securities and Exchange Commission from enforcing these news rules, let alone policing and preventing future frauds.
Republicans counter that the agencies don’t deserve the funds since they failed to stop the financial crisis to begin with.
But such an argument ignores the simple reality that these agencies were already underfunded and understaffed which meant that keeping up with Wall Street schemes became harder and harder to do.
The S.E.C. has already trimmed where it can and made moves to become a more efficient operation, and there’s little fat left to trim. Which is exactly the point of the Republicans’ move to starve the agency now. The more difficult it is for regulators to monitor Wall Street, the easier it is for Wall Street to return to its old habits.
photo courtesy of epicharmus via Flickr