Bull Bear Report Nov 03 2010

Election Results Spell Changes for Wall Street

By julie steinberg

Now that the Republicans have taken control of the House, you can expect big banks to be pleased. Many of the Republicans who are now onboard want to get rid of Dodd-Frank stipulations that they deem overly restrictive for finance firms. Here are some places where the change from blue to red may make a difference:

1. The House Financial Services Committee. Representative Barney Frank (D., Mass.) kept his seat, but he'll have to cede his role as chair of the HFSC. Spencer Bachus (R., Ala.) is expected to take his place, and he'll bring a whole new set of priorities to the position.

2. Derivatives. Bachus and other Republicans want to rewrite the rules on these babies. He claims that the new rules requiring swaps to be traded on exchanges and routed through clearing houses will take away money from the U.S. economy. The CFTC, which has made plans to hire at least 500 people over the next few years, may not be so bullish on headcount if it Bachus gets his way.

3. Fannie and Freddie. Republicans have made no secret of their desire to overhaul the two mortgage giants. There's still debate amongst top Republican politicos as to whether they should be restructured or wound down, but many jobs could be lost.

4. Consumer Financial Protection Bureau. Republicans want the new agency to get funding from Congress instead of the Federal Reserve. All the projected hiring plans could be altered if the agency loses steam before it really gets off the ground. There won't be an urgent need for bring on as much personnel if the bureau's independence is limited.

5. Foreclosures. Before the election, 50 attorneys general launched a joint probe into the "robo-signing" mess. Banks wanted to sign a deal quickly with regulators that would see them pay a large fine and be done with it. Now that there's been a bit of a shakeup, there could be a delay in negotiations.

Write to Julie Steinberg



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