The Guest Blog

Busch: Senate Begins Voting, But It Won’t End Well


It’s the Wild West for the Senate as they begin debate on the financial regulatory reform bill.

Banks to auto dealers to dentists (yes, dentists!) will all be potentially impacted by what amendments are offered and what are agreed upon.

While tougher regulations on consumer protections and derivatives are the highlights, it will be the lesser known aspects that will make or break many businesses. “This legislation deals with just about any issue you could think of,” said Steve Verdier, a senior vice president and director of congressional relations at Independent Community Bankers of America according to CQ.

So far, there still isn’t agreement on which amendments will face the 60 vote rule and which ones won’t.

As this bill progresses through the meat grinder, it’s hard to say what it will look like by the time it becomes encased meat legislation. The Republicans want to eliminate TBTF language, water down CFPA, and the Volcker rule.

Democrats want strong CFPA, Volcker rule, and few amendments.

Here’s just a few of the probable amendments:

  • Limit the size of a bank by barring them from holding liabilities (other than deposits) that exceed 2% of GDP.
  • Toughen and tighten rules for fiduciary duty requirements for institutional and individual clients.
  • Eliminate the 5% mortgage provision that forces banks to hold on to with every loan before its securitized.
  • Reduce state AG authority for consumer protections (imagine 50 states with 50 different rules).
  • Some leeway to allow bankruptcy judges to break contracts and alter mortgages (mortgage cram down)

In case you need work on your teeth, you may want to rethink getting help from the dentists or orthodontists to finance it. As Politico points out, “Dentists could fall under the Senate financial bill because they often allow patients to pay in installments, said Michael Graham, managing director of government affairs at the American Dental Association (ADA). According to a 2009 ADA survey, roughly half of dentists offer this type of billing for three or four months.

I’ve been warning that this bill would be a negative for US financial institutions and for businesses impacted by regulations. At this point, I see more losers than winners piling up every day as the details of the bill are fleshed out. And the Senate is now going to add more on to it.

This can’t end well.

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Andrew B. BuschDirector,

Global Currency and Public Policy Strategist at BMO Capital Markets, a recognized expert on the world financial markets and how these markets are impacted by political events, and a frequent CNBC contributor. You can comment on his piece and
and you can follow him on Twitter at .