Financial Reform


Working to further the interests of the financial services industry – in particular those of the big Wall Street banks and insurance companies – is one of the U.S. Chamber of Commerce’s top priorities. The Chamber’s agenda in this domain is characterized by efforts to delay, weaken and kill stabilizing safeguards designed to protect consumers and small businesses – and the broader economy – from the debilitating effects of another financial crisis.

  • The Chamber has about a dozen large financial and insurance companies on its board of directors, and the financial services sector is also well-represented on the board of the Institute for Legal Reform, the arm of the Chamber devoted to restricting consumer access to the courts. Prominent financial services companies that publicly disclose their membership in the Chamber include American Express, JPMorgan Chase, Capital One, Wells Fargo, Bank of America, Prudential Financial, AIG and MetLife.

    What does all this influence get the Big Banks? It gets them a Chamber that leads the charge against financial reform. In 2016 alone, the Chamber lobbied on 34 separate issues pertaining to the financial sector, making it the Chamber’s most frequently targeted policy area. Much of this lobbying relates to provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in the wake of the financial crisis and aimed at protecting consumers from predatory lending practices and reducing the systemic risks in the financial system that led to the crisis. While Dodd-Frank was passed in 2010, many of its provisions have yet to be implemented as a result of delays at the agencies charged with implementing the act or as a result of court challenges. The Chamber is itself responsible for many of these delays.

    While the Chamber frequently frames its opposition to financial reform as standing up for the interests of small businesses, it of course fails to acknowledge that small businesses were decimated by the financial crisis and the ensuing Great Recession and that the Dodd-Frank Act will help prevent future financial crises. What’s more, a majority of America’s small businesses now use bank-financed credit cards to help finance their daily operations. As such, these small businesses, like consumers, were subject to a host of predatory practices: hidden fees, arbitrary rate increases and opaque terms buried in the card agreements’ fine print. By reining in these abuses, the Dodd-Frank Act will directly help small businesses.

  • The Chamber has played an integral role in opposing and/or delaying several critical provisions of Dodd-Frank. And after pulling out all the stops to first try to  kill and then delay Dodd-Frank, the Chamber had the audacity to then criticize it for not being implemented expeditiously. The Chamber’s 2015 “Fix. Add. Replace. (FAR)” Agenda details the Chamber’s multi-faceted assault on Dodd-Frank.

    The Chamber has shown particular hostility towards the Volcker rule, which stabilizes the financial sector by greatly limiting U.S. banks’ ability to engage in the types of risky, proprietary trading that contributed to the financial crisis. Before it was adopted, the Chamber predicted that the Volcker rule would essentially lead to economic disaster and claimed that the regulation would hurt small businesses, even though it clearly targets larger banks. The Volcker rule was eventually approved despite lobbying efforts by the financial industry and their allies at the Chamber. Yet the Chamber’s efforts did not end there. For example, the Chamber produced reports calling for repeal and explored legal arguments calling the rule unduly burdensome, even though banks were highly profitable for decades without engaging in proprietary trading. The Chamber also supports a House bill called the CHOICE act that repeals the Volcker Rule altogether.

    Chamber representatives regularly lobby to relax safety requirements for complex derivatives. These are complex wagers largely between financial institutions and occasionally with large corporations. Failed derivatives figured in the bankruptcy of Lehman Brothers and the bailout of all the major banks. The largest bailout went to insurance giant AIG, which wrote insurance contracts on bonds called credit default swaps where AIG did not have the capital when claims were made. What’s more, these complex derivatives are certainly not used by small business.  

    The Chamber has also reserved much of its ire for provisions of Dodd-Frank that appear to threaten exorbitant executive pay packages. The Chamber has criticized the “egregious costs” of the CEO pay ratio rule, which requires public companies to report the ratio of CEO pay to median employee pay. In fact, the costs of compliance, as estimated by companies themselves, are quite small. And though the mandated disclosure would aid investors in judging the appropriateness of CEO pay packages, the Chamber wrongly dismissed the pay ratio rule as providing “misleading” information.

    In addition to targeting specific rules issued under the Dodd-Frank Act, the Chamber has also opposed the work of the new regulatory bodies created by the act.

    The Chamber has challenged the Financial Stability Oversight Council (FSOC) at nearly every turn. FSOC was established under Dodd-Frank in order to identify and monitor financial institutions whose size and interconnectedness present a potential risk to the U.S. economy and thereby prevent another collapse similar to the 2008 financial crisis. Part of FSOC’s responsibilities involves close monitoring of systemically important financial institutions (SIFIs), or companies considered “too big to fail.” The Chamber is naturally opposed to this method of limiting corporate power. In addition to launching complaints that FSOC wields too much authority, the Chamber also filed an amicus brief in the case of MetLife v. FSOC in support of the insurance giant. The Chamber supported MetLife’s argument that FSOC had overstepped its bounds by declaring the company a SIFI. Yet MetLife occupies a position within the economy similar to that of AIG, a company which was partially responsible for the 2008 crisis.

    Although FSOC has been subject to its fair share of Chamber criticism, the Consumer Financial Protection Bureau (CFPB) remains the Chamber’s favorite target. The CFPB was created under Dodd-Frank in order to protect consumers from abusive and predatory practices on the part of financial institutions. Given that many of these same financial institutions are Chamber members, the Chamber has opposed the CFPB from the very beginning. Early on, the Chamber spent millions on ads opposing the creation of the CFPB. And once the Bureau was established, the Chamber opposed the CFPB’s work at every step of the way. For example, the Chamber has argued against the CFPB’s attempts to protect credit card users, arguing that such regulations were likely to limit individuals’ access to credit. In reality, the Chamber’s actual concerns involved the credit card issuers’ access to consumers’ wallets. The Chamber has also been a strong proponent of forced arbitration rip-off clauses, which prevent consumers from taking abusive financial institutions to court. This once again puts the Chamber at odds with the CFPB, which has worked to reopen the courts to large groups of harmed consumers. Unfortunately, the Chamber’s campaign to kill the CFPB’s arbitration rule was successful, as it convinced the Republican Congress and President Trump to side with Wall Street banks over consumers and small businesses.

    The Chamber’s attacks on the CFPB go beyond specific safeguards it has put in place. In fact, the Chamber has suggested reorganizing the CFPB to dilute its influence and filed an amicus brief  in the case of PHH Corporation v. CFPB arguing that the CFPB should be structured in a way that would gut its independence.       

    Unfortunately, the Chamber has not limited its advocacy on behalf of Wall Street banks to opposing Dodd-Frank. It has also taken aim at the fiduciary rule, which would require financial advisors to act in the best interests of their clients. The Chamber has challenged the legality of the rule and published a “report” arguing that the rule would hurt individuals saving for retirement, despite the fact that the rule is specifically designed to benefit these individuals, and would save retirement savers $17 billion a year if implemented. In fact, the small business owners the Chamber cited who were “speaking out” about their concerns about the rule were an astroturf fiction created by the Chamber. That $17 billion would of course come out of brokerages’ pockets, thus the Chamber’s ferocious opposition to the rule.

  • Given that the Trump administration is stocked with corporate powerhouses and Chamber-sympathizers and has expressed an aversion to the “administrative state,” the Chamber’s crusade against financial regulations is now intensifying, benefiting from a Republican-controlled Congress that is only too happy to bend to Wall Street’s will.

    The CHOICE Act represents an attempt by Republican legislators to dismantle Dodd-Frank and revert to the dangerously unregulated financial sector that led to the 2008 financial crisis. Although the legislation is framed as protecting consumers, the bill is basically a gift to the financial services industry as it would remove the safeguards imposed by Dodd-Frank on the financial sector, freeing it to engage in dangerous speculation. The Chamber supports the CHOICE Act and is pushing hard for its passage.

    The Chamber’s dogged opposition to Dodd-Frank on behalf of its Wall Street benefactors conclusively demonstrates that it has learned none of the lessons of the 2008 financial crisis that wrecked the economy. Rather than advocate for sound regulatory policies that would benefit the entire business community, the Chamber instead chooses to carry water for Wall Street and fight for dangerous deregulation that might dope the Big Banks’ short term profits, but would almost certainly lead to another financial crisis over the medium to long term that would be catastrophic for the larger business community.