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Bill of goodies

In less than a month in office, the 114th Congress' ruling Republicans, with help from some Democrats, are showing they're on a mission to undo and delay even the most sensible measures put in place to prevent another financial meltdown.

Rep. Mike Fitzpatrick (R., Bucks) is sponsoring a bill to undo sensible Wall Street reforms. File
Rep. Mike Fitzpatrick (R., Bucks) is sponsoring a bill to undo sensible Wall Street reforms. FileRead more

In less than a month in office, the 114th Congress' ruling Republicans, with help from some Democrats, are showing they're on a mission to undo and delay even the most sensible measures put in place to prevent another financial meltdown.

The House has voted to postpone the effective date of the Volcker Rule, for instance, which restricts certain high-risk bank investments, from 2017 to 2019.

Banks complained that they needed more time to adjust to the rule, but they had known it was coming since 2010, when Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. Some banks gave up their riskiest investments, such as collateralized loan obligations, to prepare for the rule. But others, like JPMorgan Chase and Wells Fargo, upped those investments - apparently confident that Congress would help them delay or kill the rule.

Much like the toxic mortgage packages that played a leading role in the 2008 financial collapse, collateralized loan obligations are highly speculative. They are backed by loans to companies with a high risk of failure. The instruments put the banks and their customers in jeopardy, as well as taxpayers, who could be called upon to fund another bailout if the investments implode.

The bill postponing the Volcker Rule, sponsored by Bucks County Republican Rep. Mike Fitzpatrick, also would let some private-equity firms elude tougher regulations and would reduce the transparency of some derivatives trading.

Not surprisingly, many of Fitzpatrick's campaign contributions come from the securities and banking industry. The sector has invested millions in candidates and lobbying to weaken and reverse consumer and financial protections passed in the aftermath of the worst economic downturn since the Great Depression.

Analysts say future attacks on Dodd-Frank are likely to come in amendments to unrelated, must-pass bills. In the last session, for example, Republicans and some Democrats made the continued operation of the government dependent on a provision forcing taxpayers to cover bank losses due to risky investments.

President Obama has rightly threatened to veto Fitzpatrick's legislation, and some Senate Democrats have said they will try to block it. The region's senators - Bob Casey, Pat Toomey, Bob Menendez, Cory Booker, Tom Carper, and Chris Coons - say they want to prevent another fiscal crisis. Now they have a chance to prove it by voting against this bill.