"The chances of significant changes to Dodd-Frank are very, very low," said Brian Gardner, an analyst at investment-banking firm Keefe Bruyette & Woods Inc., a unit of KBW Inc.
Adding to Wall Street's uncertainty, newly energized House Republicans are set to battle over who will head the crucial Financial Services Committee. Rep. Ed Royce (R., Calif) launched a challenged Wednesday to Rep. Spencer Bachus of Alabama, who was in line to take over by virtue of his seniority. The outcome could toughen the panel's position on issues such as mortgage finance, a big Royce priority.
Nor should Wall Street firms expect any letup from New York's new top prosecutor. Eric Schneiderman, the Democrat elected as New York attorney general, said Wednesday he already was developing plans to investigate the debt and mortgage markets that target consumers.
"Cracking down on bad apples is good for the market and the people on Wall Street who play by the rules," he wrote in an email.
The six-term New York state senator from Manhattan's Upper West Side built his campaign for attorney general partly on a promise to continue in the footsteps of predecessors Andrew Cuomo and Eliot Spitzer, who aggressively prosecuted corruption on Wall Street.
The altered political landscape is expected to influence, perhaps significantly, how hundreds of regulations triggered by the measure are implemented, as Republican lawmakers use their increased clout on key congressional committees to press agencies in charge of writing or enforcing the rules.
"When it comes to the financial-services bill and the 358 regulatory filings required under that bill, that's going to require a significant amount of oversight," said Ohio Republican Rep. John Boehner, who is likely to be elected House speaker.
The U.S. Chamber of Commerce, a donor to Republicans, said it was looking for "modest" revisions to Dodd-Frank. "We don't advocate starving the regulators of funding; that doesn't help business," said David Hirschmann, president of the Chamber's Center for Capital Markets Competitiveness. ( News Corp., publisher of The Wall Street Journal, has donated $1 million to the Chamber of Commerce.)
The most likely vehicle for changes to the financial overhaul is a "corrections bill" expected next year. Such bills are usually intended to fix technical errors, such as wrongly worded referrals to other statutes. But the contents of this amending legislation are expected to be a focus of intense lobbying.
For now, Mr. Bachus is setting plans to rewrite the contentious derivatives provisions contained in the financial overhaul. Mr. Bachus said Wednesday he had the support of his party's leadership to run the committee.
"That's one of the job-killing provisions of Dodd-Frank that needs to be addressed," the Alabama Republican said. He also called for a rollback of the broad liability imposed on credit-rating agencies by the new law.
Financial firms have a long wish list of changes. High on their agenda: increased oversight of the new consumer financial-protection bureau, which has extensive authority under the new law to write and enforce rules related to mortgages, credit cards and other consumer financial products.
Ed Yingling, president and chief executive of the American Bankers Association, said he hopes lawmakers will "take a broad look at the overall impact" of the looming regulatory burden on the sector. "We estimate Dodd-Frank will result in a minimum of 5,000 pages of new regulations. We'd like Congress to step back and say: 'Wait a minute, this needs to be addressed,' " Mr. Yingling said.
Tim Ryan, chief executive of the Securities Industry and Financial Markets Association, said the industry was "not spending a lot of time on considering potential changes to the legislation. The reality is that …the administration and the regulators have a mandate to move forward. Our job is to work with them to try to achieve something that makes sense."
The reshaped Congress could look to squeeze regulatory budgets just as agencies such as the Securities and Exchange Commission and Commodity
Futures Trading Commission are seeking more money for staff to implement the new rules.
Gary Gensler, chairman of the CFTC, said Wednesday that he was "optimistic with Congress we'll work this through on the resource side." The CFTC aims to add 400 employees and will "continue to assume we get appropriate funding," he told reporters at an event hosted by the Futures Industry Association.
Rep. Scott Garrett (R., N.J.), a member of the Financial Services and Budget committees, suggested that approval of additional regulatory funding might be problematic, given concerns about the federal budget deficit and regulators "failing" to do their jobs in the run-up to the financial crisis.
But any attack on regulators that impedes the implementation of Dodd-Frank could cause a new headache for the financial industry by exacerbating the uncertainty over the final rules.
The changed political landscape "will make the process more time-consuming and difficult," said Sarah R Wartell, executive vice president of the Center for American Progress, a liberal think tank. "I'm quite certain Wall Street believes the outcome of the elections will be a net positive. But I think they'll be surprised by some of the new dynamics."
Sen. Christopher Dodd (D., Conn.), who is retiring after 30 years in the Senate, said Republicans will find it hard to force regulators to weaken his namesake law. Regulators are "not about to be browbeaten into doing something just because a group of congressmen threaten them," Mr. Dodd said.
Other Democrats also cautioned against impulsive moves to revisit last year's overhaul of financial regulations.
"Let's not put the cart before the horse," Sen. Tim Johnson (D., S.D.), expected to succeed Mr. Dodd as chairman of the Senate Banking Committee, said through a spokeswoman. "Before there is talk of rolling back sections of the Wall Street reform bill, let's wait to see what the regulators propose."
Mr. Johnson added that he is "willing to consider changes where there is consensus, but I don't see the votes in place for any wide-ranging repeal or reductions in transparency of this critically important market." Mr. Johnson is known for having a friendlier stance toward the financial industry than Mr. Dodd.
The Republican takeover of the House also will force the replacement of Rep. Barney Frank (D., Mass.) as chairman of the House Financial Services Committee. The exit of Messrs. Frank and Dodd from their powerful committee leadership posts is likely to affect the process of amending the legislation.
"That corrections bill is going to look a lot different than anything Dodd and Frank would have presented," said Sam Geduldig, a GOP lobbyist.
Analysts cautioned that it could be difficult to use the corrections bill to push through major changes on issues such as the Volker rule, which restricts banks' ability to undertake proprietary trading and invest in hedge funds and private equity. "How far can you go in a technical corrections bill?" said Mr. Gardner, the Keefe, Bruyette & Woods analyst. "Nobody really knows."
Jaret Seiberg, a policy analyst at MF Global Holdings Inc., predicted Congress won't repeal the consumer-protection bureau or eliminate new derivatives rules. "It's a much more subtle question of whether the regulatory relief bill that eventually comes out of this new Congress is focused on small changes or...a couple of bigger reforms," he said.