The Financial Services and General Government subcommittee of the Senate Appropriations Committee today approved appropriations legislation incorporating a massive 229-page financial deregulation bill. That bill, which was already rejected by every Democrat on the Banking Committee, would roll back crucial Dodd-Frank protections affecting everything from risk management at giant financial institutions to protections against the kinds of toxic subprime mortgages that caused the financial crisis. (For more detail, see the AFR opposition letter here.)
Financial deregulation bill takes aim at the CFPB
In addition to incorporating this dangerous and highly partisan rollback of financial regulations, the legislation takes aim at the Consumer Financial Protection Bureau, despite, or perhaps because of, the fact that is succeeding at its job of making the consumer finance markets safer and fairer. The appropriations bill contains policy riders that would dramatically weaken the CFPB by making it the only bank regulator which does not have independent funding, and by replacing the CFPB’s single director with a five-member commission – a known recipe for gridlock.
Incorporating these highly controversial and partisan rollbacks of Wall Street regulation into an appropriations bill is a totally inappropriate use of the appropriations process. Spending bills should not be used as back-door vehicles for reversing important – and widely popular -protections against Wall Street abuses.
The actual appropriations including in this bill also continue the attack on financial regulation, by freezing funding for the Commodity Futures Trading Commission at levels far below what is needed to implement the CFTC’s new responsibilities for oversight of the multi-hundred trillion dollar global derivatives markets.
The financial crisis of 2008 led to reforms that have begun to protect consumers and reduce the risk of another catastrophe. This legislation would reverse that progress and make the regulatory environment friendlier for the very worst elements of the banking and lending industries. The Appropriations Committee and the Senate should firmly reject it.