Now that the Republicans have taken control of Congress, can we expect changes that will affect the private fund industry? Many of the Republican firebrands that now run the legislative process in both houses have spoken about repealing the Dodd-Frank Wall Street Reform and Consumer Protection Act.
A wholesale repeal of Dodd-Frank is highly unlikely. Such a bill would be vetoed by the President and the Republicans do not have the numbers to overturn a veto.
Of course Congress may still pass a repeal bill anyhow. After all, the Republican controlled House has passed a bill repealing the Affordable Care Act dozens of times over the past few years, knowing that it will never pass the Senate or the President’s veto.
A more sensible Republican strategy will be to package some changes to Dodd-Frank in a cleverly marketed bill. We saw that happen with the JOBS Act.
Congress does have control of spending, so it’s unlikely that the Securities and Exchange Commission will be getting big budget increases.
The Volcker Rule is prime candidate for changes. Although, it is a simple idea, it has been notoriously difficult to design and implement.
I would place my bets on investment adviser user fees and a Self-Regulatory Organization to regulate and enforce investment advisers. It accomplishes more oversight that is likely to favored by the Democrats and takes resources away from the Securities and Exchange Commission that is likely to be favored by Republicans.
That is assuming that there will anything other than legislative gridlock and positioning of candidates for the 2016 presidential election.
