GOP sets sights on Dodd-Frank and consumer bureau in hunt for deficit cuts

Republicans on the House Financial Services Committee unveiled on Friday a plan to trim $35 billion from the deficit by rolling back several key administration initiatives, including large pieces of the Dodd-Frank financial reform law.

The panel will vote Wednesday on proposals to eliminate the administration's flagship housing relief program and key pieces of the financial overhaul. The GOP's plan, which will almost certainly be opposed by Democrats, would also slash the budget of the Consumer Financial Protection Bureau by more than half.

The series of recommendations are part of a GOP effort to come up with savings that could replace the automatic defense spending cuts set to take effect at the beginning of the year. Under the GOP budget that the House passed last month, committees were charged with coming up with cuts that, taken together, could replace the defense reductions.

"Our deficits and debt are a threat to both our economic security and our national security. Congress has an obligation to make tough choices that cut spending, reduce the deficit and do so in a way that does not imperil our nation’s defenses,” said Committee Chairman Spencer Bachus (R-Ala.).

The largest piece offered by Financial Services Republicans would eliminate the ability given to banking regulators under Dodd-Frank to seize and wind down large failing financial institutions. This "resolution authority" has been touted by reform backers as ensuring broad bailouts will not be needed to protect the entire financial system in the future.

But Republicans maintain the provision puts taxpayer dollars at risk, and the Congressional Budget Office (CB) estimates repealing it would save $22 billion over 10 years.

Another item on the list is bringing the budget of the Consumer Financial Protection Bureau (CFPB) under the control of appropriators, and more than halving its budget.

The CFPB receives its funding from the Federal Reserve, and does not have its spending capped by Congress. While banking regulators similarly do not have their budgets set by appropriations, GOP critics maintain the arrangement makes the bureau unaccountable to Congress.

Now, Republicans are proposing bringing the CFPB budget under the purview of appropriators, and trimming it to $200 million a year from the roughly $550 million it receives annually — a level they said is a "realistic estimate" of what the bureau actually needs. The CBO estimates the move would save $5.4 billion over 10 years.

Furthermore, Republicans would repeal the Home Affordable Modification Program (HAMP). The program, which helps struggling homeowners modify their mortgages, has missed administration targets for the number of mortgages altered. 

Republicans say the housing program is wasteful, and the House has already approved legislation eliminating it, drawing a veto threat from the White House. Getting rid of the program would save $2.8 billion over 10 years, according to CBO.

And finally, Financial Services Republicans said reauthorizing and reforming the National Flood Insurance Program would reap an additional $4.9 billion in revnue