The Consumer Federation of America (CFA) released a Dodd-Frank progress report on Wednesday warning that while regulators have made “great strides” in implementing the law’s sweeping reforms, further progress is threatened by congressional efforts to delay implementing needed reforms and defunding regulators, particularly the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
Travis Plunkett, CFA’s legislative director, says that the fate of Dodd-Frank “hangs in the balance.” He notes that while key investor and consumer protections are “generally on schedule and on track, large financial interests and their allies in Congress have taken steps that endanger the long-term success of these reforms.”
Barbara Roper (left), director of investor protection at CFA, stated in the release announcing the progress report that regulators are “working furiously” to put investor protections in Dodd-Frank in place, so “it is up to Congress and the President to ensure that they get the oversight, backing, and resources they need to make the promises of Dodd-Frank a reality.”
The CFA report gauged the progress of key consumer and investor protection provisions of Dodd-Frank and identified threats that could undermine effective implementation.
CFA addressed Dodd-Frank authorizing the SEC to create a fiduciary standard for brokers. While SEC Chairman Mary Schapiro has said the agency will proceed with rulemaking after the one-year anniversary of Dodd-Frank, the fact that “some members of Congress continue to question the need for a heightened standard … could impeded progress,” CFA said in its report.
Another important investor protection issue is the creation of the Office of Investor Advocate at the SEC, which was mandated under Dodd-Frank but has been put on hold due to lack of funding. “The SEC must get approval from House and Senate appropriators for its funding reprogramming plan before it can move forward with establishing this office and hiring a director,” CFA’s report says. The SEC has submitted a plan and is awaiting that approval.
The question remains as to whether the SEC will see a further budget boost. As it stands now, the agency was given a “modest” budget increase to $1.18 billion for this year, which was “very welcome in light of House efforts to cut the SEC budget (but) still below the $1.3 billion authorized in Dodd-Frank,” CFA notes.