According to an upcoming GAO report, last year's Dodd-Frank financial regulatory overhaul should cost $2.9 billion to implement over the next five years, though it's not clear exactly how much of that would come out of taxpayer funds. Only three of the 11 agencies charged with implementing the law are fully or partly funded by Congressional appropriations. The others get all or most of their funding from assessments of the firms and groups they oversee. As a result, financial firms will probably see their bills to the government go up.
Several media outlets, including the Wall Street Journal, got an advance look at the GAO report, which is not due out until later this week. House Republicans asked for a copy in order to support arguments that the bill will be a drag on the economy in hearings scheduled for Wednesday. The Consumer Financial Protection Bureau is a particular target for Republicans.
The GAO report estimates the Consumer Financial Protection Bureau will need to hire 1,225 full-time employees to fullfil its mandate, out of a total of 2,600 new employees for all 11 regulatory agencies, writes the Wall Street Journal.
But the Consumer Financial Protection Bureau is housed in the Fed and fully funded by the Fed and is the only regulatory agency in existence that does not have a conflict of interest in its mandate to protect investors. Even David Skeel, professor of corporate law at the University of Pennsylvania, bankruptcy specialist, and author of The New Financial Deal: Understanding the Dodd-Frank Act And Its (Unintended) Consequences, who is pretty anti Dodd-Frank, thinks it is the one thing that the legislation got right. (I interviewed Skeel for our April issue.)
Congressman Barney Frank, ranking member of the House Financial Services Committee, fired back at Republicans in a statement released Wednesday afternoon, saying that there would have been zero cost to taxpayers if the original funding mechanism for Dodd-Frank had been left in the bill.
“When the details of the report are made public, it will be important to put the cost analysis in proper perspective – there would be absolutely no cost to taxpayers if Republicans had not succeeded in stripping the funding mechanism from the bill during the conference committee,” he wrote. Democrats had proposed funding implementation with levies on financial services firms with assets of over $50 billion and hedge funds with assets of over $10 billion .