How is the implementation of Dodd-Frank coming along?
The July 2010 Davis Polk update–the two-year anniversary of the legislation–offers some additional detail: “The two years since Dodd-Frank’s passage have seen 848 pages of statutory text expand to 8,843 pages of regulations. Already at almost a 1:10 page ratio, this staggering number represents
only 30% of required rulemaking contained within Dodd-Frank, affecting every area of the financial markets and involving over a dozen Federal agencies.”
Read the rest from Tim Taylor. Oh, and check this out:
At least in the financial regulatory history of the United States, there has never been anything like it. I have seen no definitive count of the number of regulations that the Dodd–Frank Act calls forth. The numbers seem to range between 250 and 400—numbers so large that they are numbing. It all defies hyperbole. The Fair and Accurate Credit Transactions Act, adopted in 2003, astonished the financial industry with more than a dozen significant new regulations to be written. …
“One of the most common criticisms of Dodd–Frank implementation has been a lack of order and coordination in the regulatory process. Instead, the Dodd–Frank Act has succeeded in replacing the financial crisis with a regulatory crisis. … As agencies are grappling with impossible rulemaking tasks, most of them are also engaged in major structural reorganizations and shifts in the areas of responsibility. … Nothing like this has ever been tried before in the history of the United States. Writing 400 financial regulations of the highest significance and the greatest complexity in a couple of years has clearly been too much to expect. … Getting on with the work to end our self-inflicted regulatory crisis should be among the highest priorities.
Phew. Good thing this is what America really wants, and is pretty sure to get again. What was that Mencken said?
Indeed. Here, WC, is an opportunity to discuss the Negative Railroad.
How many hours are now spent by your local branch manager with the compliance department at the headquarters of a bank that is too big to fail to approve a $100,000 loan to a gas station owner who has to upgrade his tanks, again, to comply with new EPA standards? If you are the branch manager, how confident are you that the lawyer in the compliance department is giving you the correct answer?
Meanwhile, if you are the branch manager, you surely have noticed that fewer folks have been coming in the door for loans, which in your business are called assets. Those unseen customers have all calculated the after-tax return on loans and have decided it is not worth the risk, especially if everything goes down the chute.
This all assumes the branch manager can get the compliance guy on the phone. Yes, there is a special number to call if the loan is over $500 million. The call to the 10,000-person proceeds thus after three rings:
“Hello! Welcome to the [insert bank name] loan approval hotline! Due to unusually high volume, all of our specialists are busy! Please hold and an attorney will be with you shortly! [Wagner music…]….”
Some time later: “Hi, I’m Zach Taylor, JD. I’m either on another line or away from my desk studying, so please leave a message and I will get back to you as soon as I can! [background din of bucket-shop voices] beep.”
And here is an ad hominem attack against Chris Dodd:
How come after all these years, when people of his means and age should be debt-free, he gets mortgage financing for his house in Ireland?
And, er, thanks, WC, for the link to Krugman’s latest NYT op ed. I had fried oysters tonight before clicking, and so far have kept them down. OK, that’s ad hominem II, but better than QE4ever and a new Krugman jobs program, which of course are antiinflationary.
“QE4ever”
Funny! Haven’t heard that before, but pretty much sums up the current plan.
Michael, credit for that one goes to my witty cousin, who may be a new WC reader!
On the one hand, they will not be able to enforce them, except selectively, as special punishment for special enemies of whatever administration is in power. That is how these things are intended to work.
If these laws were actively enforced, it would be a huge effort involving armies of police and prosecutors, far beyond the resources now tapped for the drug war, the war on terrorism, airline security, and whatever else.
On the other hand, if these laws were actually enforced we would be bartering cows for wheat and eggs for beer in a day. (As leftwing anarchist and academic anthropologist David Graeber pointed out, barter is what monetized societies devolve to when money fails.)
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