As the two year anniversary of the signing of the 2010 Dodd-Frank Act approaches, the efforts of interest groups, lobbyists and lawyers have left many of the rules stalled in the rule-making process.
Of 398 regulations mandated by Dodd-Frank, only 120 are in effect. Many important rules are still delayed, including the controversial Volcker Rule, which prohibits banks from engaging in proprietary trading — or risky investments with client funds.
Dodd-Frank was intended to reduce risk in the U.S. financial system, enhance protections for American consumers and curb the risky behavior that contributed to the 2008 financial crisis, The Boston Globe reports.
Opponents, however, say that the legislation has negative implications for American businesses and is hindering a fragile U.S. economy. Republicans on the House Financial Services Committee are dedicating the entire month of July to hearings on Dodd-Frank’s impact, and Republican presidential hopeful Mitt Romney has vowed to repeal the law.
Rep. Barney Frank (D-Mass.) said that power struggles within Congress could mean the potential end of Dodd-Frank. Frank, who will retire at the end of the year, plans to spend his final months in Congress defending the legislation and pushing for increased funding to regulatory agencies.
“There’s this egregious effort to kill it by not funding them,” Frank said, referring to possible budget cuts to the SEC and Commodity Futures Trading Commission, according to The Boston Globe. “Republicans don’t want to give enough money to do the job right. We are pushing back to get them more money, and we’ll be fighting in the House.”
Before Dodd-Frank’s enactment, industry groups spent $302 million lobbying against the measure, saying that the potential implications of the reforms are not yet clear.
“It’s not that the industry is trying to delay the regulators,” Tom Deutsch, the executive director of the American Securitization Forum, said, The Boston Globe reports. “But if you stick a patient with 20 different needles, the interaction of all those regulatory medicines may end up being more lethal than helpful.”
Additionally, complexities of the law have made it difficult for lawmakers to finalize and implement new regulations. Federal regulators often seek public comment regarding a certain regulation, and those comments can be lengthy, complicated and must be thoroughly reviewed by staffers.
“Sometimes, regulators don’t understand the markets they regulate, and the regulators themselves don’t even know how to construct a system to enforce a provision of the law,” Tom Quaadman, the vice president of the Chambers’s center for capital markets and competitiveness, said, according to The Boston Globe.