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House GOP Ties Dodd-Frank Rollback to Fiscal Cliff

January 3, 2013
In The News

The House is expected to vote as early as Thursday evening on a bill that would repeal the government's ability to seize and unwind large, failing financial institutions and eliminate a popular mortgage modification program.

The bill, which is designed to avoid the so-called "fiscal cliff" — automatic spending cuts and tax hikes that will be triggered automatically next year unless a bill is passed — is the first time the GOP has tried to tie that issue with a rollback of the Dodd-Frank Act.

It would target a number of the financial reform law's provisions, including subjecting the Consumer Financial Protection Bureau to the Congressional appropriations process and eliminating the Office of Financial research. It would also shut down the Home Affordable Modification Program.

The bill was added to the mix late Wednesday to be considered on the House floor.

"The bill focuses on stopping waste, fraud, and abuse in federal programs, eliminating government slush funds (including an ObamaCare slush fund), and reducing waste and duplication in government bureaucracies," says a description of the bill on House Speaker John Boehner's website.

The scheduled vote comes after the Ohio Republican essentially halted negotiations with President Barack Obama over the impending fiscal cliff earlier this week, and introduced his own so-called "Plan B" that would extend many Bush-era tax cuts for earners making up to $1 million.

A number of tax cuts will expire and across-the-board budget cuts will go into effect next month unless lawmakers and the White House reach a deal soon.

But while Boehner's Plan B and the spending cuts bill are expected to pass the House, they stand virtually no chance of becoming law.

"House Speaker John Boehner has gone so far in his Plan B package scheduled for a vote today that we see little chance that the President or Senate could go along with the package even if they were inclined to support the fiscal cliff provisions," said Jaret Seiberg, a senior policy analyst at Guggenheim Partners, in an analyst note on Thursday. "The president has said he would veto Plan B. And we do not expect the Senate to even take up the bill. So it is hard to see how this package could become law."

Democrats are already speaking out against the plan, ahead of what is expected to be a largely symbolic vote in the House.

"Obviously, it is entirely legitimate to debate aspects of this bill. But to jam fundamental changes into an overall spending bill in the closing days of a lame duck session, with very little debate and no process of amendment, is a travesty of the legislative process," said Rep. Barney Frank, D-Mass., the lead Democrat on the House Financial Services Committee, in a statement. "I understand the Republicans' reluctance to do some of these things openly, but that is no justification for either the substance or the tactics they are pursuing."

Rep. Maxine Waters, D-Calif., who will serve as ranking member of the House banking panel next year, also scolded Republicans for holding the vote.

"This repeal of Wall Street Reform's Orderly Liquidation Authority produces illusory savings through budget gimmicks, and would remove a critical tool in our regulators' arsenal to mitigate systemic risk," she said in a statement. "It is unfortunate that at end of another session of Congress, the Republicans are again playing 'Russian Roulette' with the U.S. economy when they should be working in bipartisan manner with House Democrats to avert the fiscal cliff."

The bill is very similar to the Sequester Replacement Reconciliation Act of 2012, which passed the House in May. The House Financial Services Committee also approved measures to change the CFPB appropriations process and eliminate the HAMP program and the government's liquidation authority in April.