Charles Horn, a regulatory attorney at Morrison & Foerster LLP, recently said that Dodd-Frank is overly complex, adding that “border collie regulation” under a single regulator may better streamline the regulatory process.
Horn pointed to a recent paper by two Bank of England officials who essentially made the case for “border collie regulation,” which is smaller but more effective and cohesive oversight of financial markets. Horn said that the 2010 Dodd-Frank Act intended to improve the U.S. financial system has not been as effective as its proponents hoped, Bloomberg reports.
“Yes, conditions in the banking industry have improved, but the FDIC’s industry statistics indicate that the improvement is primarily, if not solely, the result of more equity capital held by banks, fewer bad loans on the bank’s books and more bank liquidity,” Horn said, according to Bloomberg. “Dodd-Frank’s stupefying size and scope over coverage…have placed enormous burdens and costs on the financial industry and regulators alike.”
Horn added that while calls to repeal Dodd-Frank may be appealing, events over the past few years have made it obvious that changes to the financial system are necessary. Additionally, Horn said that removing oversight responsibilities and placing them in the hands of a single regulator could lead to more effective oversight.
“But just perhaps, the border collie principle of ‘less is more’ might lead the way to a more manageable and effective regulatory system,” Horn said, Bloomberg reports.