On April 1, Republican Senator Jim DeMint, from South Carolina, introduced a bill to repeal Dodd-Frank, called the Financial Takeover Repeal Bill 2011. It has 18 Republican co-sponsors but no chance of passing while the Democrats control the Senate. But it points to what might happen if the Democrats lose their majority.
Other opponents of Dodd-Frank have also been growing feistier. In the months leading to the passage of Dodd-Frank in July 2010, the banking industry, which clearly disliked the proposed legislation, largely kept below the parapet. Criticism was generally expressed in a spirit of collegiate co-operation rather than outright opposition. In the wake of the worst financial crisis since the 1930s, it would not have been politic for bankers to have openly attacked the Hill’s efforts, however maladroit, to prevent a recurrence.
Now, however, it seems an increasing number of senior bankers aren’t going to take it any more. At the end of last month, Jamie Dimon, chief executive of JP Morgan, opened fire on financial regulation and new, more rigorous capital standards. He said Dodd-Frank’s insistence that companies post collateral for trading a broad range of derivatives would “damage America”.
The upshot of Dodd-Frank was, he suggested, that it had replaced a system, which was already overcomplicated and had too many regulators, with an even more complex one that has yet more regulators. “Rather than simplifying and strengthening, we added more,” he said.
In the same week, ex-Federal Reserve chairman Alan Greenspan wrote an article in which he warned Dodd-Frank could create the “largest regulatory-induced market distortion” in the US since wage and price controls were imposed by the Nixon administration 40 years ago. He suggested intrusive regulation was never the right answer, as regulators can rarely get more than a partial picture of the workings of an ever more complicated financial system.
Opposition to Dodd-Frank regulations grows louder