By Sarah N. Lynch and Christopher Doering
WASHINGTON (Reuters) - Republicans escalated their push to delay and defund the Dodd-Frank Wall Street reforms on Thursday as top regulators warned the U.S. Senate Banking Committee of a staff and funding crunch.
The chiefs of the major agencies that are writing hundreds of new rules mandated by Dodd-Frank, told a committee hearing that they need more money to carry out the law approved last year in the wake of the 2007-2009 financial crisis.
The U.S. Securities and Exchange Commission, for instance, is hampered by a flat budget, said SEC Chairman Mary Schapiro. "We have delayed very significant technology projects that would help bring the SEC's technology up," she said.
Commodity Futures Trading Commission Chairman Gary Gensler said he recognizes the need for belt-tightening to fight the federal deficit. "It's a little bit daunting to ask for more money for this agency at this time, but I really do think this a good investment for the American public," he said.
For banks and Wall Street, the Senate hearing represented another act in a long-running drama that analysts expect will lead to few, if any, changes in the Dodd-Frank reforms due to political gridlock ahead of the 2012 elections.
"Republicans will argue in favor of extending implementation of (Dodd-Frank) ... but these are timing issues and won't affect the substance of the rules," said Brian Gardner, analyst at investment firm of Keefe Bruyette & Woods.
Democratic Senator Tim Johnson, replacing Christopher Dodd, gaveled open his first hearing as banking committee chairman amid calls by Republicans for a Dodd-Frank slow-down.
Johnson said he will defend "the letter and spirit of the new law" and cautioned that its global impact must be handled "with great care to avoid unintended consequences that could impair economic growth or send good paying jobs overseas."
From derivatives oversight to bank capitalization, the financial regulation issues being debated on Capitol Hill will also feature in a Paris meeting on Friday and Saturday of Group of 20 finance ministers and central bank chiefs.
With international coordination of post-crisis reforms still a serious challenge before policy-makers, Senator Richard Shelby urged a Dodd-Frank slow-down.
"Regulators must not compound the mistakes of Dodd-Frank by promulgating uninformed rules," said Shelby, the committee's top Republican member, at the hearing.
BERNANKE ON DEBIT CARD FEE
Touching on a Dodd-Frank rule that restricts debit card fees, an issue of keen concern to banks and card groups such as Visa Inc, Federal Reserve Chairman Ben Bernanke told the panel a small-bank exemption from the fee may pose problems.
"It is possible the exemption will not be effective in the market place," Bernanke said.
The Fed, the SEC and the CFTC must put into practice hundreds of new rules stemming from Dodd-Frank, written and passed by congressional Democrats and President Barack Obama over the fierce opposition of Republicans and Wall Street.
"Chairman Johnson will be active in ensuring that (Dodd-Frank) is implemented as planned," said Edward Mills, policy analyst at investment firm FBR Capital Markets.
With 2012 elections looming and campaign donations from the financial industry rolling in, Republicans are pressing to trim back Dodd-Frank at the funding and administrative levels. A legislative rollback is unlikely to succeed with the Senate and White House in Democrats' hands.
The financial industry could win delays in implementation, said Joseph Engelhard, policy analyst at advisory firm Capital Alpha Partners. "More time will be needed," he said.
Democratic Representative Barney Frank and other Democrats on Wednesday sent a letter, obtained by Reuters, to colleagues about an attempt by Republicans to cut funding for the Consumer Financial Protection Bureau, another part of Dodd-Frank.
The CFPB is meant to shield consumers from abusive credit cards and mortgages. It will be housed within the Federal Reserve with funding from the Fed that is independent of the politically charged congressional appropriations process.
In a budget measure, House Republicans are proposing to cap at $80 million the amount the Fed may transfer to the CFPB, which aides said is slated for a $143-million budget.
Frank and fellow Democrats Brad Miller and Rush Holt said in their letter that they will offer a counter-measure to block the Republicans' attempt to "handcuff" the CFPB.
(Additional reporting by Dave Clarke, with Maria Aspan in New York; Writing by Kevin Drawbaugh. Editing by Tim Dobbyn)
