by Staff Writer on December 19, 2011
When congressman Barney Frank announced he would not seek another term, enemies were quick to predict the demise of the wide-ranging financial reform act that the Massachusetts Democrat penned with former Connecticut Senator Chris Dodd. These pronouncements are not just premature, but according to regulatory experts, probably wrong. Unless there is a real seismic political shift to the right after the 2012 elections, they say, the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010 will survive, perhaps with a little tinkering, and firms had better be prepared to deal with it.
Dodd-Frank will only face a real threat if the Republicans take the White House and a majority in the U.S. Senate, while hanging on to the House of Representatives. Right now, with former House Speaker Newt Gingrich the latest to surge to the top of the Republican pack of presidential candidates, the likely outcome of November presidential elections is far from clear. If President Barack Obama, who signed Dodd Frank into law, stays in office, he can use his veto power to try to protect Dodd-Frank. Ernest Patrikis, a bank advisory partner at White & Case in New York told Thomson Reuters: “The Republicans in the House canpass all the amendments to Dodd-Frank they want. None of them will be passed in the Senate. We’ll have to wait for the results of the 2012 elections to see if there’s enough for a change.”
If the Republicans do sweep into power and fulfill their promise to gut or repeal Dodd-Frank, many academics and lawyers argue that could actually do the U.S. markets a lot of harm. The legislation may not be perfect, but it was clear from the crisis that financial regulation needed to be redone and on the whole, Dodd-Frank is a positive step forward, they say.
Reuters, December 16, 2011