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Measures targeting financial regulations in the last major omnibus bill – last December’s “CRomnibus” – became a public flashpoint with Sen. Elizabeth Warren’s (D-MA) failed revolt against them. They’re likely to come up again, with Republicans holding even more of the bargaining power now that they control both chambers.
Consumer advocates fear a number of seemingly minor proposals with major Wall Street implications could find their way into the budget bill. One concern is a possible provisionderailing the Department of Labor’s plans to close loopholes related to fiduciary duty in the financial industry. Currently certain financial advisors can be compensated by the investment funds to which they direct their clients, and those advisors do not have to declare the conflict of interest. The administration's attempt to bring more transparency to the exchange could be thwarted by omnibus language that would block or further delay the implementation of the rule.
There is also talk of rolling back some of the Dodd-Frank Wall Street reform law, including an attempt to reorganize the Consumer Financial Protection Bureau, which is currently run by a single director. If it was restructured like a commission, as has been proposed, advocates fear it will be subjected to the sort of partisan battles that have crippled agencies like the Federal Election Commission. Wall Street reformers will also be watching for language that would scale back the Financial Stability Oversight Council’s ability to monitor to risk the financial institutions that are not banks (insurance companies, asset managers, etc.) pose to the economy. Finally, there is a fight underway about the size threshold at which the Federal Reserve should impose additional layers of oversight on certain banks.
If the White House and Dems want to protect the fiduciary rule change, they will likely have to give on one or more of the measures geared at rolling back Dodd-Frank.
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