The official said that big pieces of the law are now in effect — including resolution authority that would force financial firms to pay for any future big bank failures and higher capital requirements.
On the Hill, Wall Street reform has lately been a back-burner issue, but the JPMorgan loss has given it new juice.
Democrats and Republicans have been sparring on the implementation of Dodd-Frank since it was signed into law in July 2010, with Republicans looking to strip funding from and rein in the federal agencies responsible for writing the regulations.
Democrats are pushing to make sure the regulations have teeth, while Republicans are questioning whether the law would have affected JPMorgan’s trading one way or another.
On Monday, Senate Banking Chairman Tim Johnson (D-S.D.) announced that his panel would hold more hearings on Wall Street reform, looking into the $2 billion loss as well as other issues.
Earlier in the day, Sen. Bob Corker (R-Tenn.) called for a hearing specifically looking into JPMorgan. Corker told CNBC that there is disagreement on whether the kind of failed trade made by the company would have been allowed under a full-strength Volcker Rule.
The situation, meanwhile, is awkward for the White House given Dimon’s long ties to the administration. Dimon had been widely regarded as a potential choice for Treasury Secretary before Obama settled on current chief Timothy Geithner. Still, Dimon continued close contact with the White House, especially in Obama’s first two years. A donor to Obama’s 2004 Senate campaign, Dimon emailed regularly with then-Chief of Staff Rahm Emanuel.
Outspoken Independent Sen. Bernie Sanders of Vermont, who caucuses with Democrats, called Monday for Dimon’s resignation from his place on the New York Federal Reserve’s Board of Directors.
“It is an obvious conflict of interest for Jamie Dimon, the CEO of the largest bank in America, to serve on the New York Fed’s board of directors,” Sanders said. “The New York Fed is in charge of both regulating JPMorgan Chase and deciding whether or not to provide billions of dollars in virtually zero-interest loans to this too-big-to-fail institution if it needs another bailout. This is a clear example of the fox guarding the henhouse.”
Democratic Senate candidate Elizabeth Warren of Massachusetts — who had a huge hand in shaping the Dodd-Frank law — has also called for Dimon to resign his post at the New York Fed. Warren was the interim head of the Consumer Financial Protection Bureau, a frequent target of GOP ire, and Sen. Scott Brown (Mass.) was one of three Republican Senators to vote for the bill.
But it’s unclear that the attention the issue is garnering in the Bay State will affect other races.
“What we saw last cycle is that obviously there are larger umbrella issues — the economy, health care,” said National Republican Senatorial Committee spokesman Brian Walsh. “But even though there’s national buzz about other things, in the end, all races end up being about two people in each state and their competing visions on issues such as taxes, spending and the role of government.”