The Federal Financial Forum

The new Consumer Financial Protection Bureau, as designed under Dodd-Frank, will be an independent unit inside the Federal Reserve, the U.S. central bank. Among its chief missions will be regulating mortgages and credit cards.

Under the law, the Fed will fund the watchdog directly. But some Republicans want to force the consumer bureau to request funding each year from Congress through the appropriations process, giving lawmakers more influence over its scope.

Consumer advocates and other backers of the watchdog fear such a change would make the bureau a political football.

WHAT ARE OTHER TARGETS IN DODD-FRANK?

Early next year, the Fed must write rules for implementing three key parts of Dodd-Frank:

— the Volcker rule limiting proprietary trading by banks

— a rule limiting banks’ ability to count trust-preferred securities as Tier One capital

— new limits on debit card transaction fees.

“We would expect Republican-run committees in either chamber to hold many more oversight hearings on these rule-makings as Republicans try to moderate these proposals,” said Concept Capital analysts Chris Krueger and Jaret Seiberg.

Dodd-Frank also called for new rules for credit rating agencies such as Moody’s Corp and Standard & Poor’s, leaving much latitude to regulators on the issue.

Republicans may push for new curbs on credit rating requirements in federal regulations but resist exposing the agencies to more legal liability, analysts said.

WHAT ABOUT HOUSING FINANCE REFORM?

A gaping hole in Dodd-Frank was its failure to fix the housing finance system in general and mortgage giants Fannie Mae and Freddie Mac in particular. Both are known as government-sponsored enterprises, or GSEs.

Lawmakers from both parties vow to address the GSE issue.

Look for more congressional hearings on Fannie and Freddie, with Republicans pushing to minimize government involvement in the sector and Democrats defending some continued form of government mortgage guarantees.

FBR Capital Markets said in a report that housing finance reform could take two years to complete, flagging as important a Treasury Department report expected in December.

“If Republicans win a majority in the House … GSE reform will be a top agenda item. We would be expecting an initial draft from House Republicans that would seek to offer as much of a private market solution as possible,” FBR said.

(Reporting by Kevin Drawbaugh; Editing by John O’Callaghan