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How a Bill Doesn’t Become Law

The news was mostly relegated to the back pages and the scroller at the bottom of the cable news screens, what with the fired Federal Bureau of Investigation director’s testimony and all the resulting presidential “tweets” taking up all the good space, but the House of Representatives last week passed a bill that would largely repeal and replace the Dodd-Frank financial reform law.
The Dodd-Frank financial reform law is the dry and complicated and downright boring sort of thing that would get more attention during a typical presidential administration, which makes us all the more nostalgic for those good old days before President Donald Trump. We never liked the Dodd-Frank bill, so far as we can tell the repeal-and-replace law would be a significant improvement, and in a more normal news cycle a well-spoken Republican president would be able to enjoy a winning political argument. Instead, the matter is relegated to the back pages and the scroller at the bottom of the string, and the bill will probably be stalled in the Senate.
The few stories on bill note that Dodd-Frank was passed in the aftermath of the 2008 financial meltdown with the aim of preventing it from happening again, and for the sake of argument we’ll stipulate the Democrats’ good intentions, but the few allotted inches can’t make a case that the legislation did any good. Ostensibly in order to prevent the big banks from making reckless bets on subprime mortgages Dodd-Frank imposed thousands of pages on new regulations to prohibit commercial banks from certain kinds of “proprietary trading” and investments in hedge funds and private equity transactions, but none of that had anything to do with the financial meltdown. All the restrictions are imposed on commercial banks rather than the investments banks that were most involved in the crisis, and all of them had been compelled by the Carter-era Community Reinvestment Act that the Clinton administration started enforcing with crazed vigor, and most of those risky subprime mortgages were held by the quasi-governmental Fannie Mae and Freddie Mac outfits, and the Democrats should be glad they don’t have to talk much about that.
Nor did the bill do anything at all about those “too big to fail” banks that the Democrats were so worked up about when Dodd-Frank was passed by Democratic majorities in the House and Senate and signed by a Democratic president, and it wound up hampering the small banks and credits unions that Democrats have been romanticizing since before Frank Capra filmed “It’s a Wonderful Life.” The damned thing even forced us to spend an hour filling out forms to excise a nickname from a 47-year-old checking account a while back, and one can only guess at the extraordinary amount of time and money that the overall economy has spent on complying with all those thousands of pages of regulations. Banks will be able to accumulate more reserves to deal with shocks under the House Republicans’ alternative, which also wisely lets the bankruptcy courts sort out the inevitable failures, and the freedom and competition it allows would likely have a stabilizing effect on the financial system.
That’s hard to explain in the 140-character “tweets” and fourth-grade level orations that Trump favors, though, and these days he has other things to “tweet” and talk about. The press has plausible reasons for relegating it to the back pages and the scroller at the bottom of the screen, and it’s hard to imagine the general public taking a sudden interest in financial regulatory reform. The House bill now goes to the same Senate where the House’s Obamacare repeal-and-replacement bill currently languishes with 12 percent approval ratings, and the rules are different there and the Republican majority is slimmer and the Republican incumbents up for re-election in 2018 have their own reasons for striking a bipartisan pose, so this might be the last your hear of it.

— Bud Norman

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