Anna Pinedo, a partner at Morrison & Foerster, said that the Dodd-Frank Act, the massive financial overhaul passed after the recent financial crisis, is indicative of a shift in regulatory mindset.
The legislation has 848 pages, 1,601 sections and mandates 398 total rule-makings to be distributed among various regulatory agencies, IFLR reports.
Before the financial downturn, regulators classified the financial soundness of various financial firms on a case-by-case basis. Dodd-Frank reforms, however, focus heavily on the interconnected nature of the financial sector, and with it has come the idea of systemic risk.
Despite promises by Republican presidential hopeful Mitt Romney to repeal Dodd-Frank if elected, few industry participants expected the law to be repealed. Additionally, Pinedo said that scaling back the reforms after economic improvement is unlikely.
“I don’t see it happening, because it involved such a fundamental philosophical shift,” Pinedo said, according to IFLR. “It’s possible, of course. But I suspect it would be limited to loosening around the edges.”
Pinedo also said that the number and complexity of Dodd-Frank provisions has created a confusing web of delayed and vague regulations.
“It’s not been the case with other legislation that has resulted in significant changes, as legislators took their time formulating the statutes and there was additional opportunity for analysis and comment,” Pinedo said, IFLR reports. “But here, the process has been really broken.”