Democrats and Republicans returned to familiar partisan corners on Monday as they duked it out over the four-year anniversary of the Dodd-Frank financial reform law.
The arguments leveled by both sides made clear that the passage of time has done little to close the partisan gulf between the parties on whether the law, and the reams of new regulations it created, were the proper response to the financial crisis.
Congressional Republicans opposed Dodd-Frank from the start, and on Monday said time has proven them right.
Republicans on the House Financial Services Committee commemorated the anniversary of the financial overhaul by releasing a nearly 100-page report detailing what they said are its shortcomings.
Committee Democrats fired back with a report of their own, highlighting the work regulators have done and their impact on the marketplace.
The partisan feuding continued even as many of the largest pieces of the landmark law have fallen into place. Regulators have completed work on several of the law's most significant, and most contentious pieces, such as the "Volcker Rule" that bars banks from engaging in proprietary trading for profit.
But plenty of work remains. The law firm Davis Polk determined that as of the law's four-year anniversary, just over half of all 398 of the required rulemakings have been finalized, with nearly a quarter not yet proposed.
The broad argument of the GOP report is that Dodd-Frank failed in one of its fundamental missions — ending “too big to fail,” the idea that banks enjoy an implicit financial guarantee from the government.
The “too big to fail” debate has continued to play out in the halls of Congress, with lawmakers from both parties airing skepticism the bailout era has truly ended, despite insistence from the administration and the financial sector that the matter has been addressed.
On the first page of their report, Republicans noted that while President Obama said Americans will “never again” have to bail out banks when he signed Dodd-Frank into law, Treasury Secretary Timothy Geithner flatly noted upon leaving public service that “too big to fail” still exists.
“Of course it does,” he told The New York Times.
In their report, House Republicans trained their criticism on several aspects of the sweeping law.
They described the Financial Stability Oversight Council as an “unwieldy conglomerate” that lacks transparency. That panel gathers top regulators from across government to regularly meet about broad threats to the financial system, and has the power to identify firms as “systemically significant,” which subjects them to heightened oversight and regulation.
But Republicans contend that label actually serves as a government-sponsor seal of “too big to fail,” by informing markets what firms the government views as most critical.
While Dodd-Frank backers supporters the law gives regulators to power to step in and wind down ailing institutions instead of bailing them out, Republicans also questioned the efficacy of that power. They said the “orderly liquidation authority” given to regulators by Dodd-Frank remains dangerously untested.
The report also reiterates a number of long-time GOP complaints about financial regulation, including the lack of attention paid to government-sponsored enterprises Fannie Mae and Freddie Mac during the reform effort, and the burdens new rules place on the financial sector.
The GOP report does not suggest any specific changes to be made to the law, nor does it call for the law to be repealed altogether. Rather, Republicans used the anniversary as an opportunity to highlight perceived flaws in the law, and push back against the drive to regulate more at every sign of trouble.
The Republican report also does not attempt to dissect the law in its entirety. The report is primarily focused on issues the GOP has identified as it pertains to “too big to fail.” The Consumer Financial Protection Bureau, a top target of Republicans since its inception, is barely mentioned in the report, and is not singled out for criticism.
Democrats, for their part, highlighted the huge amount of work regulators have done in the last several years to implement the law, but accused Republicans of throwing up "roadblocks to implementation."
They also tallied the number of bills House Republicans have tried to advance that would take apart or otherwise change various parts of the law, and noted the number of times regulators have testified about their work in an attempt to undercut claims there is insufficient oversight. All told, regulators have testified 96 times before the House since Dodd-Frank became law, according to their report.
The Financial Services panel is set to hold a hearing on Wednesday to re-examine the law after its fourth birthday. Former Rep. Barney Frank (D-Mass.), the titular sponsor of the law who retired in 2011, will be on hand to testify, among others.
This post was last updated at 4:29 pm.