President Barack Obama may have to decide whether it’s worth shutting down the government to protect tough rules for Wall Street.
Lobbyists for the biggest banks are trying to force the Obama administration into a game of chicken to see how far it’s willing to go to maintain industry reforms and some of the sweeping changes enacted in the Dodd-Frank Act of 2010. Despite Obama’s veto threats, they’re pushing lawmakers to include provisions that would roll back some of those changes in the end of year spending bill that has to be passed next month.
After failing to get enough congressional support for revisions such as a delay of strict rules known as a fiduciary standard for brokers who give retirement advice, the banking industry sees the appropriations bill as its last chance to win concessions this year. Lobbyists are following last year’s playbook, when they persuaded lawmakers to slip a provision that watered down rules for the $700 trillion derivatives market into a bill that funded the government.
“Issuing a veto threat of a standalone bill is a very different thing from having a large appropriations bill on your desk,” said Terry Haines, head of policy analysis for Evercore ISI.
Democratic lawmakers, led by Wall Street critic Senator Elizabeth Warren, along with key Obama administration officials, are going on the offensive early to rally support and prevent a repeat of what happened with derivatives. Some Democratic backing will be necessary for any changes to financial rules that are included in the appropriations bill since Republicans control only 54 seats in the Senate and at least 60 votes are needed.
Jill Hoffman, vice president of government affairs for the Financial Services Roundtable, said it’s important to make sure that the rule doesn’t prevent consumers from getting meaningful advice about their retirement accounts.
“We will keep all options on the table to make sure we preserve that access,” Hoffman said.
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