Financial regulation: back to the good ol' days of 2008.

• Author: Konczal, Michael
• Position: WHAT IF HE LOSES?

Immediately after the GOP took the House last year, Alabama Republican and chairman of the House banking committee Spencer Bachus made the mistake of saying what he actually believes about financial regulation. "In Washington, the view is that the banks are to be regulated," he told the Birmingham News, "and my view is that Washington and the regulators are there to serve the banks." This view is consistent with thirty years of Republican-backed financial deregulation as well as with the conservative explanation of what went wrong in the financial crisis. And if the Republicans manage to take both elected branches of the government next year, this is likely to be the spirit in which they'll approach the post-Dodd-Frank era.

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. A large reworking of the financial economy, it was opposed by Republicans from the beginning. House Republicans voted in committee against crucial planks like derivatives reform and throughout the entire process added loopholes and exemptions, including one that removed auto lending from the consumer financial protection umbrella. With few exemptions, notably on the matter of auditing the Federal Reserve, there was no bipartisan support for new regulations.

Going forward, the Republicans' intentions with respect to Dodd-Frank are already clear: in Congress, they have introduced repeal legislation, and every major Republican presidential candidate has pledged to repeal Dodd-Frank in its entirety. It's fair to take them at their word. Even if a Republican majority set out to kill the bill in one fell swoop but was blocked by a Democratic filibuster, it wouldn't really matter. That's because there are a series of simple steps Republicans can take to pull apart Dodd-Frank piece by piece. The collective effect would be similar to that of an overall repeal and would leave the global financial system in serious peril.

Why does the GOP view Dodd-Frank as an unnecessary overreach? In their minds, there's no problem to solve where the financial system is concerned. While the vast majority of economists and financial experts view the 2008 collapse of the banking sector, and the ensuing Great Recession, as the result of decades of unrestrained, unregulated experimentation by Wall Street firms, the right rejects this ,view. Conservatives see the crash as a cautionary tale about government intervention in the housing...