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Democrats fight efforts to weaken financial reform law

Nicole Gaudiano
USA TODAY
Sens. Charles Schumer, D-N.Y., and Elizabeth Warren, D-Mass., talk during a news conference on the fifth anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act at the Capitol Visitor Center on July 21, 2015.

WASHINGTON — Democratic congressional leaders said Tuesday they're fighting Republican attempts to weaken consumer protections in the Dodd-Frank Wall Street reform law that passed in response to the Great Recession.

A mix of progressives and moderates, speaking at a news conference to mark the law's five-year anniversary, credited it with a more stable financial system and expanded protections for consumers in the financial sector. They were joined by former senator Chris Dodd, a Connecticut Democrat who co-authored the 2010 legislation with former congressman Barney Frank, D-Mass.

"We never suggested we wrote the 10 commandments," said Dodd, now CEO of the Motion Picture Association of America. "This is a bill, a complicated bill, and certainly there will be issues down the road that probably need some modifications. But it ought to be done through the prism of trying to improve and strengthen and protect the American consumer from the kind of damage done to them by institutions that deregulated and did everything they could to rip off innocent people in our country."

Republicans say the law has hurt jobs and economic growth while big banks have gotten bigger. Among other changes, Republicans want the Consumer Financial Protection Bureau, created by the 2010 law to protect consumers in the financial sector, to receive funding through the annual appropriations process rather than automatically from the Federal Reserve. The House Appropriations Committee last month passed legislation with that change, which Democrats say would make it harder for the agency to function independently.

"What is most disturbing about Dodd-Frank is the authority it gives bureaucrats to control huge swaths of the economy," Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, wrote in a Monday Wall Street Journal op-ed piece. "The director of the Consumer Financial Protection Bureau ... can declare any consumer-credit product 'unfair' or 'abusive' and outlaw it. Oversight? CFPB funding is not subject to congressional appropriations, and Dodd-Frank requires courts to grant the bureau deference regarding its interpretation of federal consumer-financial law."

Democrats at the news conference said the four-year-old agency has handled 650,000 complaints and returned $10 billion to consumers who were cheated by financial institutions.

"We're fighting against the people who think it's OK to jump into bed with the biggest financial institutions in this country and try to roll back every protection that was put into place five years ago today," said Sen. Elizabeth Warren, D-Mass., who proposed creation of the agency before becoming a senator.

In December, progressive Democrats led by Warren unsuccessfully fought passage of a spending bill that included a provision to relax Dodd-Frank restrictions on banks trading certain derivatives, a contributing factor to the financial crisis. The spending bill, which passed the Senate 56-40, would remove the Dodd-Frank requirement that banks "push out" some of those activities to affiliates not entitled to certain federal assistance.

Democrats said they expect further attempts to change Dodd-Frank this week as the Senate Appropriations Subcommittee on Financial Services and General Government begins work Wednesday on a fiscal 2016 spending bill for financial services agencies.

"If Dodd-Frank opponents try to weaken regulations, slash funding for our regulators or kill Dodd-Frank with a thousand cuts, they're going to find Senate Democrats standing arm in arm against them," said Sen. Charles Schumer, D-N.Y. "Dodd-Frank is working."

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