Dodd-Frank law tough to implement

Mitchell Hartman Jun 14, 2011

Dodd-Frank law tough to implement

Mitchell Hartman Jun 14, 2011

Kai Ryssdal: There is other news of trouble in Dodd-Frank-land today. The financial reform bill’s supposed to go fully into effect in mid-July. But the Commodity Futures Trading Commission announced this morning that it wants to delay some new rules governing the $600 trillion derivatives market ’til year’s end.

Derivatives — if you’ve managed to put them out of your mind — are things like credit default swaps that were at the heart of the crisis a couple of years ago. And today’s slide in getting new regulations into place isn’t the first time. Marketplace’s Mitchell Hartman reports.

Mitchell Hartman: Already, government agencies have missed 28 deadlines for getting out new regulations.

Lawrence Baxter: The complexity is just enormous.

Lawrence Baxter teaches financial law at Duke University and he says there’s a lot of lobbying going on.

Baxter: Large banks, small banks, investment banking have opposed a number of the rules in an effort simply to ensure that they are not as severe as had been expected — cutting back on major sources of revenue in the interests of financial stability and reduced risk.

Scott Talbott: Our goal here is not to slow down, or water down — that’s a red herring.

That’s Scott Talbott of the Financial Services Roundtable, an industry trade group. Bankers complain that some draft rules are burdensome and costly.

Talbott: And so if it takes an extra week or an extra month to write the regulation — to get it right — the benefits to the market in the long run far exceed that little bit of time.

But it’s hard to get the job done in part because Republicans in Congress have blocked financial agencies from staffing up. Supporters of Dodd-Frank say the delaying tactics are designed to run out the clock until the 2012 elections, then get financial reform revisited.

Lawrence Baxter says that’d be a mistake.

Baxter: Instability is lurking all the time. And if another big bank goes down, I think you will see a much bigger public reaction.

With another round of financial panic, a huge credit crunch and the economy tanking all over again. Baxter says if the banks think they’re heavily regulated now, just wait.

I’m Mitchell Hartman for Marketplace.

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