Financial Regulation

Dodd-Frank Financial Regulation: We'll Figure It Out When We Get There! Maybe!


When President Obama signed the Dodd-Frank overhaul of financial regulation in the summer of 2010, he cast the law's passage in explicitly historic terms: "These reforms represent the strongest consumer financial protections in history," he said.

He had grand ambitions for the new rules and regulations, which he promised would, among other things, "rein in the abuse and excess that nearly brought down our financial system. It will finally bring transparency to the kinds of complex and risky transactions that helped trigger the financial crisis." Also, the law would make borrowing contracts simpler, end taxpayer funded bailouts, and provide "certainty to everybody, from bankers to farmers to business owners to consumers." 

How, exactly, would the law's many lofty goals be accomplished? Well, that was still yet to be determined. Initial counts indicated the law called for 67 new studies to be undertaken and for federal regulators to write 243 new rules. (Current counts have the number of new rules to be written at 398.) In other words, they had passed TBD legislation, and they would figure out how it all worked when they got there.

They're still trying to figure it out. And it's taking a little longer than planned. The Washington Examiner's Timothy Carney points us to the Davis Polk consulting group's latest progress report on the Dodd-Frank rule writing process. A couple of bullet points stand out:

  • Of these 237 passed deadlines, 145 (61.2%) have been missed and 92 (38.8%) have been met with finalized rules. Regulators have not yet released proposals for 31 of the 145 missed rules.
  • Of the 398 total rulemaking requirements, 131 (32.9%) have been met with finalized rules and rules have been proposed that would meet 135 (33.9%) more. Rules have not yet been proposed to meet 132 (33.2%) rulemaking requirements.

Is everybody feeling certain yet? Turns out rewriting the nation's financial rules and regulations is a little bit harder and more complex than most folks expected. That includes at least one of the law's key backers, Rep. Barney Frank (D-Mass.), who earlier this year grumbled that the Volcker rule created as a result of the law was probably too complex. "The agencies tried to accommodate a variety of views on implementation but the results reflected in the proposed rule are far too complex, and the final rules should be simplified significantly," he said. But don't worry. Our effective and perceptive federal financial regulators will get it figured out eventually, just like they always do. 

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  1. Does anyone know why private sector job growth is so slow? I can’t figure it out.

    1. I blame Bush.

    2. I’m thinking it’s all because of Y2K. All those coders thought they solved the problem, but, in fact, it’s just been slowly degrading our financial software, producing wildly inaccurate statistics, like high unemployment.

      We’re actually in an incredible boom, driven by our enlightened election of a magical, racism-ending black man and many stimulations and bailouts.

      1. As someone who was on the front lines during Y2K, I represent the implication. I fixed all my text-based applications, a couple of which are still in use to this day…

        1. Well, how else do you explain this impossibly bad economy? It simply has to be an illusion.

          1. Pretend, for a moment, that all the software applications were failing. That would put our economy on a 1912 footing. We should be growing wildly!

            1. You’re just saying that because you sabotaged our glorious leader’s presidency.

            2. Yeah, I mean look at the price of gold for crying out loud.

              1. Clearly an undefined function at work there.

    3. Primarily because the current approach to market “reform” reads like a Morgan Freeman ad-lib, rather than a carefully thought out response from Frederick Douglass.

    4. Ugh, you rightwing nutjobs. As if regulations have any noticeable effect on employment or economic growth. Next you’ll trot out the confidence fairy!

      1. AKA Animal Spirits.

  2. In other words, they had passed TBD legislation, and they would figure out how it all worked when they got there.

    Sadly, this approach is not at all unusual.

    1. And to add injury to insult, as far as I can tell, that dreaded monstrosity, Too Big To Fail, appears to be alive and growing and stimulated by this Dodd-Frank frankenstein experiment run amuck.

      1. At least didn’t ‘pass the bill to find out what’s in it.’

      2. Wrong. Dodd-Frank has a death panel for TBTF banks (called orderly resolution) if their capital falls below a certain level.

        Banks have been bolstering capital since that and other regs.

        1. Gee, I can’t imagine how that would affect new lending.

          Or what the FED might do to help out their owners buddies in those TBTF banks.

        2. You are a digital sack of walking points, aren’t you.

          Although you don’t care, and have no clue about what this subject, let me refer you – and anyone else who cares – to various items written by Anat Admati and Simon Johnson, and to simplify things for you here are those right-wing nuts at the huffingtonpost:


          A more rigorous treatment by Admati et alia is found in the comments and paper found by searching “Comments on Enhanced prudential standards under section 165, and early remediation requirements under section 166 of the Dodd-Frank Act”

          wherein: If anything, the too big-to-fail problem seems to have become more severe with the consolidation of some of the large banking institutions that occurred during the crisis. The implicit subsidies created by the implicit, too-big-to-fail guarantees are still present and still lead to enormous moral hazard
          problems. They distort pricing and incentives and increase the risk to the system. All of this has serious adverse consequences for the entire economy.

  3. Anyone notice that post-Dodd Frank, we have had more than one brokerage collapse after raiding its customers’ supposedly sacrosanct accounts, costing the customers billions of dollars?

    And the courts have signed off on this?

    This is “the strongest consumer financial protections in history”?

    Man, this is such a target-rich environment for Romney. His staff really is not up to the mark (although not for the reasons the DemOp media says). One of his ongoing campaign themes should be to highlight a colossal failure of the Obama administration every week, with examples;

    (1) Auto bailout. (GM losing market share and market cap, pension funds pensioners raped, etc.)

    (2) Green energy (multiple failed crony companies, very few jobs, no federal leasing for oil and gas, pipelines blocked, E15 gas)

    (3) Foreign policy.

    (4) Financial reform.

    Etc. ad infinitum.

    1. Romney’s about a positive message.

      1. Until he starts to sink in the polls. Hopefully.

        1. Romney: “America’s doomed! Even if you vote for me, we’re probably completely screwed. But if you vote for Obama, I guarantee disaster. Vote for that one chance in a thousand that I’ll suck less. Vote Romney.”

          1. “As America heads for the fiscal cliff, I promise to trying tapping the brakes!”

      2. Sarcasm?

  4. Sounds pretty solid to me dude. Wow.

  5. To add to the bullet points:

    – Everything to-date in Dodd-Frank that has ever seen the light of day has been revealed to be jaw-droppingly stupid and self-destructive. One example was the part of the Volker Rule which supposedly aimed to bar banks from ‘prop trading’ – i.e. the bank using “its own money” to trade its own book, for profits it does not distribute to clients.

    Well it turns out its virtually impossible to distinguish ‘prop trading’ from ‘market-making’. Banks pointed out to lawmakers that the rule, as written at the time, would effectively ban banks from maintaining a standing inventory of Municipal Bonds (among other things) – which meant the Federal Govt was effectively destroying liquidity in the very asset class State governments use to raise money.

    in other words, the rule was basically shooting itself in the face with a double-barelled shogun.

    It gets stupider the deeper down you go.

    Foreign banks are exempt (we don’t want *outside countries* to stop investing willy-nilly in the US!)… while US Banks foreign operations are *also* barred under the law? However, US banks can trade with ‘counterparties’ in transactions.. which basically means, “all profits from trading MUST go to foreign banks” It would force trillion of $ in transactions solely through foreign institutions… for what benefit?? It is a idiotically complex arrangement that doesn’t achieve anything like what it seemed to intend

    1. It is a idiotically complex arrangement that doesn’t achieve anything like what it seemed to intend

      Sounds like Obamacare. I am sensing a pattern.

  6. Better alt-text: “The Jabberwocky and Tweedle-dee and Tweedle-dum.”

    1. Barry, Curly and (ho)Moe.


  7. “The agencies tried to accommodate a variety of views on implementation but the results reflected in the proposed rule are far too complex, and the final rules should be simplified significantly,” he said.

    You mean adding further complexity to an already overly complex system doesn’t simplify operation within the system? Who could have seen that coming?

    1. Apparently that didn’t work. Let me try one more time.
      iframe width=”420″ height=”315″ src=”” allowfullscreen/iframe

        1. Describe it to us with puppets.

  8. 3 Rules are enough:
    1. be careful with your money. It is YOUR money but some people will try to make it THEIR money.
    2. be careful when you borrow money. Is is SOMEONE ELSE’S money until you pay for it. It only looks like YOUR money.
    3. Your smart decisions/choices will be reward and your stupid decisions/choices will be punished. Don’t take it personally.

  9. “Everything to-date in Dodd-Frank that has ever seen the light of day has been revealed to be jaw-droppingly stupid and self-destructive.”

    If Barney Frank has anything to do with it, it is going to be jaw-droppingly stupid and counter productive and yet somehow resulting in he and his blow job buddies ending up fabulously rich.
    God I despise that hair-lipped piece of shit.

  10. This makes a whole lot of sense dude.

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