This week, with Congress’s most unproductive session in modern memory nearing an end, the House of Representatives will take up an array of measures to deregulate Wall Street – measures for which there is close to zero voter support.
If all goes according to its leaders’ plans, the House will debate and approve three separate legislative packages containing dozens of proposals to reverse or impede the financial reforms adopted after the 2008 crisis, or to throw procedural roadblocks of a broader kind in the way of the already slow process of adopting financial as well as health, safety and environmental regulations.
Consider just one of these proposals: the wildly mistitled Small Business Capital Access and Job Preservation Act. HR 1105 will have almost no effect on small businesses or jobs. Its chief beneficiaries – and advocates – are private equity fund advisers, including some of the wealthiest and most powerful entities on Wall Street. Its purpose is to protect them from basic reporting requirements meant to help regulators monitor systemic risk in the financial system and protect investors and the public.
In the Dodd-Frank financial reform law of 2010, Congress directed hedge and private equity fund advisors to register and submit annual financial reports to the Securities and Exchange Commission. It was a small step, but one that has already unearthed some startling information. It turns out, according to the SEC, that more than half of all private equity funds have been systematically cheating their own investors by sticking them with hidden fees and charges. Since many private equity investors are pension funds, foundations and endowments, these practices, as the SEC noted in a very disturbing report, have been eating away at “the retirement savings of teachers, firemen, police officers, and other workers throughout the U.S.”
Thankfully, HR 1105 has little prospect of being approved by the Senate in this session. That is something it has in common with the other deregulatory measures on which the House plans to hold votes over the next few days. Their purpose is to not to make law but to let Wall Street other special interests know: we are on your side. In fact, the sponsors of these measures are hoping to attract minimal notice from their constituents, since polls show that voters, across party lines, overwhelmingly believe that rules for the financial industry should be tougher, not weaker.
For more on two of the House bills, see AFR’s letter on the Insurance Capital Standards Act and the Promoting Job Creation and Reducing Small Business Burdens Act
Text of three measures discussed here:
- Jobs for America Act (HR 4)
- Dodd-Frank “technical corrections” bill (HR 5404)
- Leverage and risk bill (un-numbered)