After disappointing Wall Street critics by signing into law bills that weakened his landmark financial regulatory overhaul law, President Barack Obama delivered an emphatic message Tuesday night: Dodd-Frank is here to stay.
Financial reform groups breathed a sigh of relief as the president warned Congress against “unraveling the new rules on Wall Street” in his annual State of the Union address. As Obama touted the nation’s economic recovery and rallied Congress to do more for the middle class, he also spoke sternly about possible attempts to chip away at his signature 2010 law.
Any legislation that tries to weaken oversight of big banks, Obama added, “will earn my veto.”
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The president’s move to defend Dodd-Frank this week in a nationally televised address couldn’t have come sooner for Wall Street watchdogs and proponents of robust financial regulations. In recent months, they’ve grown increasingly frustrated by successful attempts to make changes to the law.
Since December, congressional Republicans have twice attached provisions to roll back or tweak parts of Dodd-Frank to legislation that the president ultimately signed into law: the government spending bill and a bill to reauthorize a federal terrorism risk insurance program, known as TRIA.
Concerned about the precedent these recent events could set on future attempts to weaken parts of Dodd-Frank, advocacy groups had been lobbying the White House to use the State of the Union address to send a warning shot to banks and their lobbyists in Washington.
In a telephone conference last week, for example, one Wall Street reform advocacy group, Public Citizen, shared their State of the Union wish list with White House officials. Among the requests was that Obama not only defend Dodd-Frank in his speech, but also threaten to veto future bills aimed at undermining the law.
Bart Naylor, a financial policy advocate at Public Citizen, said Obama seemed to have found “a new backbone to defend Dodd-Frank.”
“On Dodd-Frank, we got what we wanted. We wanted him to stand up and threaten a veto,” Naylor said. “He will need to make good when Congress sends him a bill that’s packaged with something else.”
While Republicans have largely been united in their fierce criticism of Dodd-Frank, the law has at times proved to be divisive for Democrats.
Lawmakers like Sen. Elizabeth Warren (D-Massachusetts) and Rep. Maxine Waters (D-California) have been reticent to consider certain changes to Dodd-Frank, expressing concern that they would undermine the law’s main purpose of creating a more stable financial system and preventing a repeat of the 2008 crisis. They have in the past butted heads with some fellow Democrats that sided with Republicans on industry-backed legislative proposals billed as “technical changes” to Dodd-Frank.
Wall Street reform advocates said Wednesday that they hope Obama’s State of the Union address will serve as an important line in the sand.
“It’s clear that the strategy of Republicans and Wall Street’s friends in Congress is to try to undermine Dodd-Frank using death by a thousand cuts,” said AFL-CIO’s Heather Slavkin Corzo, who has worked on financial regulatory issues. “So to see the president say he won’t allow that strategy to continue was important.”