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Republican win will not lead to Dodd-Frank repeal

Thursday 4 November 2010 - by Nicola York

A leading US think tank says that the Republicans winning control of the House of Representatives will not lead to a repeal of the Dodd-Frank Act, despite the majority of GOP members opposing the Bill.

The Brookings Institution fellow Douglas J. Elliott says Republicans are not in the position to repeal it and "there are real reasons to doubt that they would choose to do so anyway".

He says that the Democrats are still able to block any repeal through their control of the Senate and ultimately, President Obama's powers of veto.

And secondly, Elliott says the Republicans will have to be careful not to feed public perceptions that they are friendly with "the despised bankers".

Elliott says: "Concern on that score kept Republicans from holding firm on their Senate filibuster of the original bill and that concern will remain, since hatred of bankers seems unlikely to fade away anytime soon.

"Related to that, they must be aware that any momentum to reverse parts of Dodd-Frank could be undercut by another major lawsuit, or even criminal charges, against major Wall Street players.

"The SEC suit against Goldman Sachs was a strong force that drove Dodd-Frank forward in its final phases and past crises show us that there are likely to be a number of additional legal actions over time as the crisis is dissected further."

But Elliott does believe that the Republicans will attempt some more limited actions to alter financial reform and says they may repeal a few elements of Dodd-Frank that they object to the most.

He adds: "At the extreme, they may threaten to withhold funding to implement certain aspects of the bill. But, the impact of the Republican victory will be far less than it would have been if Dodd-Frank had not yet been signed into law. Timing is everything in politics."

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