Third Anniversary of the Dodd-Frank Wall Street Reform Act – Unfinished Business

July 21, 2013

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. The intent of the Act was to prevent a recurrence of the events that led to the 2008 financial crisis and address the issue of too-big-to-fail. This legislation was directed primarily at the nation’s largest banks and financial firms and marked the greatest change to regulation in the financial service industry in decades. With the passage of the 848-page bill, it became the responsibility of the federal agencies to begin writing the rules to turn Congress’ law into detailed implementing regulations.

More than 10 federal agencies have been mandated to implement aspects of the Dodd-Frank Act, but the majority of the rules are being written by just six agencies: the Federal Reserve, the FDIC, the OCC, the CFPB, the Commodity Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC). In certain cases the rule-writing requires coordination among several autonomous federal regulatory agencies which is proving to be more challenging and time-consuming than expected – leaving much that remains to be done.

July 21, 2013 marked the third anniversary of the Dodd-Frank Act. The law included a total of 398 federal rulemaking requirements.

Of the 398 required rules –
    158 rules have been finalized,
    113 rules have been proposed (but not finalized), and
    127 rules have not been proposed. *
Key provisions of the Dodd-Frank that are still unfinished include a rule that curbs a bank’s ability to do its own in-house trading (Volker Rule), and a rule requiring lenders to retain some credit risk in loans they securitize.

Treasury Secretary Jacob “Jack” Lew said recently, “If we get to the end of this year and we cannot, with an honest, straight face, say that we have ended too-big-to-fail, we are going to have to look at other options.” Lew stressed, “It is unacceptable to be in a place where too-big-to-fail has not ended.”

CBAI supports the continued reform of our financial system to significantly reduce the probability and severity of a future financial crisis. The taxpayer bailout of big banks and financial firms must never happen again!

*Source - Davis Polk & Wardwell - Dodd-Frank Three-Year Anniversary Report