Policy

Barney Frank Still Believes in Dodd-Frank

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In April, regulators charged with making official rules to govern the financial system under Dodd-Frank, last year's financial overhaul bill, had 26 rulemaking deadlines. They missed all of them. 

Since the law's passage last year, regulators have completed just 24 of the 387 rules the law requires be drafted and implemented by at least 20 seperate government agencies, according to a report published by non-profit journalism outfit ProPublica. The legislators behind the law outlined broad principles but left much to the discretion of regulators. Regulatory discretion, though, seems to have morphed into regulatory delay, thanks in part to interest group politics: "The Byzantine, tedious rulemaking process has occasionally pitted regulator against regulator and proved a bonanza for lobbyists," the report says.  

A sign the law has gone predictably bad? Not at all. Barney Frank (yes, that's his name on the bill) is super stoked about the first wave of regulations. No, there's nothing to worry about, according to federal officials. They're just polishing the rules until they're perfect: 

Treasury officials are sanguine about the delays. "If we have to sacrifice a little bit of time to get to the right answer, that's the right thing to do," said Mary Miller, the assistant secretary for financial markets.

…"The first set of rules are going to be good ones," said the law's namesake, Rep. Barney Frank, D-Mass. "These regulators are on the right side."

Sorry, Barney. The confidence is nice, but there is no "right side" here. Nor is there any "right answer" when it comes to the sort of financial regulation Dodd-Frank attempts. Congress didn't want to hammer out the arbitrary details required to regulate the financial system, so it wrote a law requiring regulators to hammer out those arbitrary details for them. But it turns out the regulators are having just as much trouble as Congress did, and provoking just as much attention from financial sector lobbyists. 

Given the law's scope, complexity, and vague directives, neither the sluggish pace of implementation nor the lobbyist bonanza are at all surprising: Any law governing minute details of the financial system is bound to be a target for high-dollar lobbying campaigns. The more influence the government claims over Wall Street, the more Wall Street will seek to influence the government.