Dodd-Frank: More rules get delayed or weakened

A Wall Street stop sign

UPDATED REPORT

JEREMY HOBSON: The Commodities Futures Trading Commission says it needs six more months to finish writing new rules required by the Dodd-Frank financial reform law. It's just the latest delay in the implementation of Wall Street reform.

Marketplace's Jeff Horwich joins us live with the details. Good morning.

JEFF HORWICH: Good morning

HOBSON: Well Jeff first tell us about this latest delay.

HORWICH: These are the rules for trading in derivatives, also called "swaps" -- but even that's up in the air because in fact writing a formal definition of "swap" has itself been delayed. These are financial bets that companies make to protect against risk -- could be based on interest rates, wheat prices, weather patterns.

Christopher Whalen of Institutional Risk Analytics calls derivatives an "unregulated ghetto."

CHRISTOPHER WHALEN: It's like playing poker without any chips. You would play poker if you didn't have to bet, right? That's exactly what these banks were doing.

A bunch of new rules are supposed to bring derivatives into the light of day, force traders to maintain some margin to cover losses.

CHIOTAKIS: And these are the rules that we're talking about are now being delayed. Is that the story for the new Dodd-Frank rules across the board?

HORWICH: Here's the scorecard according to the law firm Davis Polk: 28 deadlines missed; 115 rules proposed but not finalized. Banking analyst Chris Marinac says the uncertainty is bad for business.

CHRIS MARINAC: I think the marketplace would have liked these rules yesterday. That's just not realistic. And I would be surprised if six or nine months from now you and I are having the same conversation.

Twenty-four new rules have been finished, including one that requires companies to let shareholders vote on executive pay. Two-hundred-eighteen more Dodd-Frank rules still have their deadlines yet to come.

CHIOTAKIS: Marketplace's Jeff Horwich, thanks for the scorecard.

HORWICH: You're welcome Jeremy.


ORIGINAL REPORT:

JEREMY HOBSON: To Washington now where there's been another delay for Wall Street reform. The Commodities Futures Trading Commission says it needs six more months to finish writing new rules required by the Dodd-Frank law.

Marketplace's Jeff Horwich joins us live with the details. Good morning.

JEFF HORWICH: Good morning.

HOBSON: Well Jeff -- tell us about this latest delay.

HORWICH: Well, these are the rules for derivatives trading. This is also sometimes called "swaps trading" -- but even that is kind of up in the air because part of what's been delayed here is actually writing definitions for all these terms. Generally speaking, derivatives these are loosely regulated financial bets that companies make to protect against risk -- could be based on interest rates, wheat prices, weather patterns. Bad derivatives bets helped bring down Lehman Brothers and AIG, and a whole bunch of new rules are supposed to bring them into the light of day. Those are now put off until December.

HOBSON: Well is that kind of delay wide spread for all kinds of rules in the Dodd-Frank law?

HORWICH: Yeah. Here's the scorecard. As of June 1, according to the law firm Davis Polk, 28 deadlines officially missed; 115 rules proposed but not finalized by their deadline, and 24 actually completed. Those completed rules include new capital requirements for banks, and one that requires companies to let shareholders vote on executive pay. One more looming number here: 218 more Dodd-Frank rules still have their deadlines yet to come.

HOBSON: Marketplace's Jeff Horwich, thanks so much.

HORWICH: You're welcome.

About the author

Jeff Horwich is the interim host of Marketplace Morning Report and a sometime-Marketplace reporter.

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