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House Financial Services Committee Chairman Jeb Hensarling (R-Texas) reiterated support for using the budget process to go after parts of the Dodd-Frank Act, a likely backup plan if his broad overhaul legislation stalls in the Senate.
Republicans could use budget reconciliation to undo parts of the sweeping law that involve federal spending with simple majorities in both chambers.
In theory, this could allow Republicans to defund Dodd-Frank’s “orderly liquidation fund,” which would bankroll the Federal Deposit Insurance Corporation as it winds down a failing institution. Lawmakers could also target the funding mechanism for the Consumer Financial Protection Bureau and the Office of Financial Research.
Hensarling’s comments came at a June 8 Heritage Foundation event and reflect the reality of moving legislation through a narrowly divided Senate. Although the House passed Hensarling’s ambitious Financial Choice Act (H.R. 10) later the same day, the bill’s prospects are bleak in the Senate given Democratic opposition to revamping Dodd-Frank.
Hensarling told reporters earlier this year that any related Dodd-Frank bill unveiled by Senate Banking Committee Chairman Mike Crapo (R-Idaho) would have to account for the Senate dynamic.
“The House is a majoritarian institution, the Senate is not, to state the obvious,” Hensarling said. “So he’s got a different set of challenges, and I would expect his bill to look very different.”
Senate rules, though, require only a simple majority using reconciliation, a process designed for faster congressional action on tax and spending issues.
With reconciliation, the House and Senate agree on a budget resolution with directives for specific committees. Once the panels approve changes under those directives, the full Senate and House are tasked with passing them.
Under Senate rules, reconciliation is forbidden for policies that don’t involve taxes, spending or the debt limit. The orderly liquidation fund would seem to qualify, but the Senate parliamentarian makes the final determinations.
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