After the wreckage of the financial meltdown that occurred in 2008-09, the stated goals of the Dodd-Frank Act seemed reasonable and bipartisan enough: “To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail,’ to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.”
But like many well-meaning legislative efforts, the bill became clouded by political mud fights and ballooned in size and scope. When the Dodd-Frank Act was signed by President Barack Obama (above) on July 21, 2010, there were few Republicans present and only three Republicans in Congress, all senators, who actually voted for it. There are presently two dozen bills in Congress seeking to dismantle sections of the law, with Republicans, now in control of the House, and various business groups leading the effort to restrain Dodd-Frank’s reach.
Signing Off on Bill
Then Sen. Chris Dodd, D-Conn. (center), and Rep. Barney Frank (right), D-Mass., shake hands with President Obama after the signing of the bill on July 21, 2010. Dodd did not seek reelection that fall and left Congress in 2011 to become head of MPAA, the main motion picture lobbying group. Frank became the ranking Democrat on the House Financial Services Committee after the Republicans took power in January 2011.
Bachus Bumps Frank
When Republicans gained control of the House they were able to begin cutting into much of the regulatory meat of the Act. Rep. Spencer Bachus (left), R-Ala., took the chairmanship of the House Financial Services Committee, which oversees implementation of the law, from Frank. Since then, Bachus, backed by the powerful business lobbying group U.S. Chamber of Commerce, has tried to slow down implementation of the law and scale back its broad scope.
Rulemaking Deadlines Galore
As of July 21, 2011, there were to have been 122 rulemaking deadlines that needed to be met. The law firm of Davis Polk & Wardwell publishes a monthly Dodd-Frank Progress Report that shows the progress of the rules’ implementation. Davis Polk says that it uses “empirical data to help market participants and policymakers assess the progress of the rulemaking and other work that has been done by regulators under the Dodd-Frank Act.” (Click here to enlarge chart.)
According to Davis Polk, this chart, on Statutory Deadlines for Required Rulemakings, “represents the due dates for all final rules required under Dodd-Frank. These deadlines are based on the statute and will not change absent congressional action. A large percentage of required rulemakings are due in the third quarter of 2011 (28.3%), most of which relate to OTC derivatives regulation.” (Chart courtesy of Davis Polk & Wardwell)
Progress by Agencies
These four pie charts by Davis Polk show Rulemaking Progress by Agency. Very few rulemaking requirements (only 6.2%) have been met with finalized rules. Many agencies will have no choice but to miss deadlines in an increasing number of instances.