The Senate Banking Committee on Thursday heard controversial testimonials from top financial regulators on the implementation and impact of last year’s Dodd-Frank financial oversight law.
The legislation was designed to make markets less risky after the 2008 financial crisis, but many feel that it has not worked.
"It has turned the financial regulatory landscape into a nightmare,” Ranking Republican Member Richard Shelby (Ala.) said, MoneyNews.com reports.
Republicans reconfirmed their position that the law is harming the economic recovery while Democrats insist the regulations were a necessary response to the financial crisis.
Barney Frank (D-Mass.), the co-author of the law, attacked Republicans for not approving sufficient appropriations for the agencies responsible for carrying out the new rules.
"This nickel and diming of the SEC and CFTC I think does grave harm," Frank said, referring to Republican efforts to restrict money for the Securities and Exchange Commission and the Commodity Futures Trading Commission, MoneyNews.com reports.
A small group of regulatory agencies are responsible for writing hundreds of new rules to protect the swaps market, to reduce risk at top financial firms and to bring the shadow banking system into the traditional regulatory framework.
Regulators are months behind on key rules, as they struggle to keep pace with the rapid rule writing timeline laid out in the law.
Stop-gap protections have been put in place to ensure stability in the derivative market since parts of the law were set to take effect on July 16 although many derivative rules have not been completed.
"While some feel we are moving too quickly and others feel we are not moving rapidly enough, I believe we are proceeding at a pace that ensures we get the rules right," Securities and Exchange Commission Chairman Mary Schapiro said in prepared testimony, MoneyNews.com reports.
Federal Reserve Chairman Ben Bernanke responded to bank executives’ concerns regarding the law’s regulatory collateral damage, noting that any sweeping reform comes with costs and uncertainties.