That doesn’t mean lawmakers don’t have legislative options. Members of both parties in the House and Senate have introduced measures to make a broad spectrum of changes to how Wall Street does business, from shrinking the largest banks and barring bank officials from serving on the boards of regional Federal Reserve banks, to repealing or loosening portions of the Dodd-Frank Act’s restrictions on the trading of derivatives.
The Republican-led Financial Services panel has churned bills to make changes to Dodd-Frank and has scheduled five hearings in July to examine the impact of the law on various sectors of the marketplace.
Still, in an election year with a looming “fiscal cliff” -- a raft of expiring tax provisions paired with the beginning of $1.2 trillion in automatic spending cuts over a decade -- proposed changes to Wall Street’s rules are expected to languish, according to Edward Mills, a financial analyst at Arlington, Virginia-based FBR Capital Markets.
“Congress responds to crisis and deadline,” Mills, a former Democratic aide on banking and financial services issues in the House and Senate, said in a telephone interview. “Absent a crisis we’re not going to see anything and the only real deadline on the horizon is the fiscal cliff issue at the end of the year.”
Wall Street’s financial influence -- political action committees from the securities and investment industry have contributed $6.7 million to lawmakers in the 2012 cycle, according to the Center for Responsive Politics -- may also play a role as lawmakers on both sides of the aisle look for a financial advantage in the final months of their campaigns, said Calabria, who is now director of financial regulations studies at the Washington-based Cato Institute, which promotes free markets.
In the presidential race, Romney, the former head of Bain Capital LLC, has swung the financial support from the securities and investment industry heavily in his favor, according to the Center for Responsive Politics. The Republican has collected $9.4 million from the industry, while Obama, whose campaign has focused in part on Romney’s career in private equity, has pulled in $3.4 million.
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