Ryan budget targets key piece of Dodd-Frank

House Budget Committee Chairman Paul Ryan's (R-Wis.) budget proposal would eliminate a key aspect of the Dodd-Frank financial reform law intended to allow the government to avoid future bailouts in crises.

The budget proposal offered by Ryan and House Republicans Tuesday would apparently eliminate a pair of Dodd-Frank provisions -- one that allows the new Financial Stability Oversight Council to designate nonbank firms as "systemically significant," and another that would allow the Federal Deposit Insurance Corporation (FDIC) to step in and wind down large financial firms that are failing.

"Their [Democrats] financial overhaul is not reform. Its fundamental architecture expands and centralizes power in Washington, doubling down on the root causes of the 2008 crisis," Ryan's budget proposal states. "This budget would end the regime now enshrined into law that paves the way for future bailouts."

Republicans contended during the debate on Dodd-Frank that those measures ensure future bailouts for firms when they are hit hard, while proponents contend they do just the opposite -- by putting in places procedures that allow firms to be dismantled in an orderly fashion, it prevents the need for future broad bailouts.

The FDIC approved in March proposed rules implementing the Dodd-Frank provision, detailing how creditors could recoup funds from failed firms, and indicating that the regulator could reclaim pay from executives that were deemed responsible for the failure.

It also co-authored rules with the Federal Reserve that would establish "living wills" for firms, which would create a blueprint for how they could be dismantled in the event of a crisis.

Ryan's proposal marks the latest in a recent spurt of Republican attacks on Dodd-Frank. House Republicans have introduced a handful of bills that would tweak or repeal specific provisions of the law, while Senate Republicans, including its entire leadership team, introduced legislation Friday that would repeal the law altogether.

It also hits another major GOP agenda item in the financial sector, declaring that government-sponsored enterprises Fannie Mae and Freddie Mac will eventually be wound down and eliminated.