Financial Reform Watch

Published — June 17, 2011 Updated — May 19, 2014 at 12:19 pm ET

Reform reading: Is Obama too eager to collect Wall St. campaign dollars?

Mark Lennihan/AP

Credit raters may be SEC target; in defense of Morgan Stanley

Introduction

A daily round-up of commentary, analysis and news about the Dodd-Frank financial reform law.

Reform stalled by Obama campaign? – President Barack Obama is conceding too many tough financial regulations as he tries to woo Wall Street donors for his 2012 reelection campaign, writes TIME commentator Roya Wolverson.

By allowing banking lobbyists and Republican lawmakers to delay countless Dodd-Frank provisions, the president is weakening the reforms mandated by Congress last year. Even his likely nominees to head key regulatory agencies – Martin Gruenberg and Raj Date – share Obama’s “conciliatory” views towards banks, the columnist says. Worse, Obama’s actions aren’t “just putting reforms on hold; it’s washing them all away,” Wolverson claims.

SEC gets tough with credit raters – Some credit-rating companies face possible civil fraud charges for their role in developing the mortgage-bond deals that helped fuel the financial crisis, the Wall Street Journal reports.

As part of a long-running probe into the deals, the Securities and Exchange Commission is now investigating whether Standard & Poor’s and Moody’s Investors Service did enough research to adequately rate the pools of subprime mortgages. Until now, major credit rating firms have largely avoided regulatory crackdowns. The SEC has already been looking into the sales and marketing of the mortgage-bond deals by Citigroup Inc., Morgan Stanley, Bank of America Corp., and UBS AG.

JPMorgan defense – JPMorgan Chase & Co’s complaints of over-regulation deserve to be heard because it is arguably the only big U.S. bank that could have survived the 2008 financial meltdown without taxpayer money, an Economist columnist writes.

Barry Zubrow, the bank’s chief risk officer, has joined the chorus of bankers and lobbyists arguing that the Dodd-Frank regime is too strict. Zubrow, who testified earlier this week at a House hearing, is especially concerned about the extra capital that systemically important financial institutions — or SIFIs — will soon be required to have on hand. Zubrow says that forcing the biggest banks to have an extra 1 percent or more cushion of capital — on top of the minimum 7 percent required by Basel 3 rules — is too punitive.

CFPB budget cut – The Consumer Financial Protection Bureau (CFPB) would see its fiscal 2012 budget cut by 9 percent from current funding, under a bill approved by the House Appropriations subcommittee on financial services.

House Republicans have attacked the CFPB’s current funding directly from the Federal Reserve, which was designed to shield the agency’s budget from the political tug-of-war that most agencies face each year. They aim to bring the CFPB’s budget under the control of Congressional appropriators by 2013, according to The Hill. In sum, the appropriations panel approved $19.9 billion in CFPB funding for 2012, down $2 billion from its current budget and $6 billion below the White House’s planned budget.

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