Sen. Mike Crapo (R-ID) says for the past three years, Sen. Harry Reid (D-NV) has refused to allow any amendments to the Dodd-Frank Act to be enacted, but now Sen. Tim Johnson (D-SD), chairman of the Senate Banking Committee, has shown interest in reforms during this session of Congress which will end in Jan. 2015. Despite the ongoing antagonism between the two parties, Sen. Crapo says there is now the possibility of agreement. “In terms of how broad it will be, there is obviously still a difference between the two parties as to the extent of reforms that are needed, so I can’t really predict at this point how far we will be able to go, but there are increasingly areas where we are finding common ground,” he says. According to risk.net, industry has been fighting aspects of Dodd-Frank through the courts. In Sept. 2012, a lawsuit brought by the International Swaps and Derivative Association (Isda) made the Commodity Futures Trading Commission (CFTC) redo its rule on commodity market position limits. Crapo is particularly concerned about cross-border implementation of Dodd-Frank. In November the CFTC issued an advisory against banks that pulled an end run around CFTC rules to avoid U. S. regulation. Sen. Crapo wrote a letter in support of the participants, saying they may cease engaging in certain business activities to avoid the burden of compliance with Title VII of the act because it effectively pushes business away from the U. S.
Sen. Crapo suggests there are three areas where bi-partisan support exists to amend Dodd-Frank: End users of derivatives need to be exempt from the legislation; small lenders, especially community banks are in a difficult regulatory position because they are subject to heavy compliance costs that give their “too big to fail” competitors an advantage; and three, section 716 of Dodd-Frank, called the swaps push-out rule will push up the costs of hedging for small ranchers and farmers.
The Obama administration does not want “premature” changes made to Dodd-Frank, scheduled to take effect next month, preferring a wait and see approach to determine what alterations “might be necessary in certain areas to improve the effectiveness of these reforms.” Sen. Johnson agrees implementation of Dodd-Frank before any changes are made is the way to go. While a bi-partisan consensus on amending certain provisions of the Act is growing, trying to move Congress can be overwhelming. Sen. Crapo also thinks the Securities and Exchange Commission (SEC) should be combined into a single regulatory agency, but the institutional and historical powers that be, as well as vested interests inside and outside Congress prefer the status quo, which MHProNews fully understands.
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