(Bloomberg) â?? Republicans will try to rein in regulators implementing a sweeping overhaul of financial rules and press for a smaller federal role in the mortgage market as they return to a majority in the House of Representatives and a stronger minority in the Senate.
Taking control of the House and bolstering their position in the Senate will increase Republicans' sway over the direction and independence of the Consumer Financial Protection Bureau and over any technical fixes Congress makes in rules governing the trading of derivatives. Networks projected that Republicans won the seats needed to claim a majority of the House.
Republicans say they will use the House Financial Services Committee to ensure that regulators such as the Commodity Futures Trading Commission and the new consumer protection bureau do not write rules that lawmakers consider too restrictive to the banking industry.
"We don't want them to regulate capriciously, arbitrarily, without engaging in a cost-benefit analysis," Representative Jeb Hensarling, a Texas Republican on the panel, said in an interview before the election.
A slowdown in rule making or added pressure on regulators may benefit companies such as Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of America Corp., which lobbied against portions of the Dodd-Frank law and predicted the measure would hurt their financial results.
President Barack Obama called attention to the Republican agenda in his weekly radio and Internet address Oct. 23, saying House and Senate members "are now beating the drum to repeal all of these reforms and consumer protections."
"I think it would be a terrible mistake," Obama said.
Because Democrats still control the White House and the Senate, Republicans will be unlikely to make good on their calls for a fundamental reshaping or outright repeal of the Dodd-Frank law or unwinding the government's role in housing finance.
Still, the Republican approach will mark a shift from the era of Democratic control when bankers often were the ones being called to account before the Financial Services Committee.
The Dodd-Frank act, which requires federal agencies to write more than 240 rules, provide 67 one-time reports and conduct 22 recurring studies, according to an analysis by Davis Polk & Wardwell LLP, will give Republicans a chance to put the spotlight on regulators, said members, analysts and lobbyists.
"The targets will be bloat and corruption within the regulatory agencies." said Sam Geduldig, a Washington-based financial services lobbyist for Clark, Lytle & Geduldig and former Republican leadership aide.
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