Last month, the Dodd-Frank Wall Street Reform and Consumer Protection Act "celebrated" its one year anniversary. Thirteen months after passage, how is the legislation doing? Or how has Dodd-Frank impacted the financial industry? Has it turned out to be akin to "a nuclear bomb killing an ant" as Speaker Boehner proclaimed at passage? Or does it promise to end "Too Big To Fail" forevermore, as claimed by President Obama at signing?
According to the Wall Street Journal article The Truth (and Lies) About Financial Regulation it is too soon to tell. "Much of Dodd-Frank has yet to be implemented. More than 200 provisions of the law haven't been enacted, while 23 that should have been enacted are overdue and 121 changes to previous law are still in the proposal process. Just 38 rules have actually been implemented, according to Davis Polk, a law firm tracking the law."
One of the reasons that the rulemakers appear paralyzed is that since passage of Dodd-Frank, the lobbying of regulators responsible for implementing Dodd-Frank has skyrocketed. According to Forbes: "While regulators, responsible for designing rules to implement laws 'laid out in principle' only, struggle with insufficient budgets and political pressure from both sides of the aisle, lobbying has exploded. According to the Center for Responsive Politics, the CFTC, the Fed, the FDIC, and the Office of the Comptroller of the Currency (OCC) have seen more lobbying activity in the first quarter of 2011 than at any other moment since Obama became president. The SEC saw it’s second most active month."
Further, despite the too early to evaluate nature of Dodd-Frank, the political rhetoric remains heated. The Wall Street Journal reports on the following:
Will Dodd-Frank end Too Big To Fail? "For the bill's defenders, we have Sen. Sherrod Brown. The Ohio Democrat said last April that the bill would end 'too-big-to-fail.' Speaking for the opposition, there is Sen. Mitch McConnell. The Kentucky Republican said that Dodd-Frank 'actually guarantess future bailouts of Wall Street banks.' He said the bill sets up a '$50 billion slush fund.' PolitiFact scored Mr. Brown's statement as 'barely true' and Mr. McConnell's as 'false.'"