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House GOP Budget Targets Dodd-Frank and Elizabeth Warren's Brainchild

The new proposal will go after the Consumer Financial Protection Bureau and says it will end the practice of taxpayer bailouts.

In the new budget proposal released by House Republicans on Tuesday morning, House leaders are targeting a number of Obama's legacy-boosting accomplishments, including his administration's attempts to tighten regulations on Wall Street.

The attacks on Dodd-Frank are not surprising, given that they have appeared in previous GOP budget proposals and that many Republicans have voiced long-standing opposition to the act's financial regulations. In a press conference after the 2014 midterm elections, now-Senate Majority Leader Mitch McConnell called the law "Obamacare for Banks."

The budget plan denies the Federal Deposit Insurance Corporation "the authority to access taxpayer dollars to bail out creditors of large, 'systemically significant' financial institutions."

Dodd-Frank includes a provision called Orderly Liquidation Authority, under which the FDIC may be appointed as a receiver for a bank that is in danger of default, and whose resolution under bankruptcy code could cause instability, and in turn carry out the resolution of a troubled financial institution.

The text of Dodd-Frank says the Orderly Liquidation Authority would not leave the general public on the hook and that money for the process would come from an "Orderly Liquidation Fund" that would receive revenue from the systemically important financial institutions themselves.

But Republicans opposed to Dodd-Frank have long criticized the provision. McConnell had previously said the program is actually a bailout for Wall Street banks.

In addition, the budget puts the Consumer Financial Protection Bureau, considered the brainchild of Democratic Sen. Elizabeth Warren of Massachusetts, under the appropriation authority of Congress. Currently, money for the bureau comes from remittances from the Federal Reserve.

"These remittances are earnings generated by the Federal Reserve and were originally intended to be deposited in the Treasury to help fund general government, not to directly finance a politically favored agency, thereby allowing it to escape the annual appropriations process," the budget document said.

But by going under the congressional appropriation process, the CFPB would possibly receive less money and thereby be weakened, even if the bureau is not abolished through statutory law.

Former House Budget Committee Chairman Paul Ryan had previously proposed the same funding shift in his budget, under the premise that the remittances from the Federal Reserve—which is not subject to appropriation from Congress as a means of keeping it independent of politics—should go to the Treasury Department to reduce the deficit.

However, while Ryan's House budgets failed in the Senate in previous years, it is likely that the new Republican majority in the Senate would support the changes to Dodd-Frank.

The proposed budget, though, is still largely just an outline of ideas from the House GOP; Senate Republicans are slated to release their own proposal this week. There are also major points of contention on the overall budget among Republicans, which could imperil the effort from going forward.

Even if a budget with the changes to Dodd-Frank was agreed upon by both chambers of Congress, President Obama made clear his opposition to attempts to repeal rules on Dodd-Frank and has previously threatened to veto spending bills based on budgets from the Republican House.