Deadlines for many of the rulemakings mandated by last summer’s financial reform legislation have slipped, leaving the implementation dates for some key measures up in the air.
The Dodd-Frank Act mandated that dozens of rulemakings be completed within either nine months or a year of the bill’s enactment. Nine months have now passed. The one-year mark is fast approaching. Much remains undone.
But Rep. Barney Frank (D-Mass.), who championed the bill in the House last year, isn’t concerned about the delays. “There are a lot of complicated rules there,” he said. “I believe all the agencies are working hard to try to complete them.”
The regulatory agencies will get the rules finished “as soon as it can be rationally done,” Frank told HuffPost. “What difference does it make if it‘s a month later or six weeks later?”
Until definitions and regulations are finalized, there will be no new regime for derivatives, the complex investments that played a key role in amplifying the financial crisis. Also at issue are regulations regarding such things as oversight of credit-rating agencies; a new program for whistleblowers; and the implementation of the Volcker rule, which would limit a bank's ability to make risky speculative bets and its financial involvement with hedge funds and other high-octane trading firms.
The Huffington Post reported two weeks ago that the Securities and Exchange Commission had delayed its final rulemaking on three measures that were due on April 15. One of those is an anti-corruption measure that calls for publicly traded companies to disclose how much they pay foreign governments to acquire drilling and mining rights in their countries.
The measure has been fiercely opposed by oil and mining interest, and the bipartisan duo of senators who sponsored it expressed concern about the delay and requested an explanation from the SEC.
But Frank said that delays do not in any way indicate that rules are being watered down. “We have regulators in every case who are sympathetic to what we are trying to do,” he said.
The Dodd-Frank law created an enormous workload for the already strapped staffs of regulatory agencies, calling for at least 240 rulemakings. And the delays have hardly been a secret; commissioners have been warning about them for months, and have adjusted their public calendars accordingly.
And the staffs of the SEC and CFTC are jointly holding a two-day public roundtable next week to discuss the schedule for implementing final rules for swaps, and are specifically requesting public comment on how they should be phased in.
Howard Kramer, who practices securities law for the Schiff Hardin law firm, said he is concerned about the possibility of much longer delays. “There’s no actual impact from missing the deadlines. They can still go beyond those dates and enact the rules that they’re intended to enact,” he said. “The agencies I think in good faith are trying to get as many of the rules done as possible -- but there’s just too much.”
"It’s worth time to get the rules right," Kramer said, but the longer the rules are absent, the harder it is for people to make plans -- and the more vulnerable the system remains to the problem that led to the last crisis.
Kramer told The Huffington Post he thinks that getting everything done by next July is essential. “If they wait much beyond that, then they run the risk of getting into the next round of elections. And of course everything can change, the next round of elections.”
For that reason among others, House Republicans have proposed legislation that would push back the implementation of the Dodd-Frank derivatives rules by 18 months -- something Democrats and reformers are fiercely opposed to.
Frank said that when the bill was being written, its authors didn’t intend the due dates to be set in stone. “The deadlines are really targets,” Frank said. With complicated rules, “you cannot estimate a year in advance with precision how long each of them are going to take,” he said.
“They are all going to be done in a timely fashion,” he said. “I would guess in a few more months. There is no undue delay.”