After four years of twisting arms in Congress, Wall Street may have finally found the opportune moment to reshape financial regulation.

A flurry of legislative deal-making surrounding the federal budget has opened a window of opportunity for bank lobbyists to challenge the Dodd-Frank Act, the sweeping regulatory overhaul passed in response to the financial crisis. With the clock ticking on a budget bill — lawmakers have vowed not to shut down the government, but need to act by Thursday night — banks are seeking to tuck their proposals into the giant federal spending package.

Whether they succeed remains an open question. As of Tuesday afternoon, some Democrats and consumer groups retained hope that they could fend off the Wall Street effort.

The fight has centered on elements of Dodd-Frank that address the culprits of the financial crisis, including the sort of derivatives trading that helped push the insurance giant American International Group to the brink of collapse in 2008. One bill would amend the so-called Volcker Rule, a centerpiece of Dodd-Frank. Another bill that lawmakers plan to include in the government funding plan was essentially written by lobbyists for Citigroup.
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The last-minute inclusion, hammered out by party negotiators, is outraging several Democrats who have spent years fighting back against GOP efforts to reduce the impact of the 2010 law.
The titular sponsor of the law, retired Rep. Barney Frank (D-Mass.), is calling on his former colleagues to defeat the funding bill because of the “stealth attack” on his namesake legislative achievement.

House Minority Leader Nancy Pelosi (D-Calif.) said Democrats are “deeply troubled” by several provisions included in the roughly 1,600-page bill posted Tuesday evening and highlighted language stepping back tougher rules on financial derivatives.

“This provision, allowing big banks to gamble with money insured by the FDIC [Federal Deposit Insurance Corp.], opens the door to another taxpayer-funded bailout of big banks — forcing middle class families to bear the burden of Wall Street’s mistakes,” she said in a statement.
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