US Outlook: One of the great set-pieces of the US legislative process is the formal signing of a bill into law. With the legislation's supporters and beneficiaries gathered around, applauding, the president signs each letter of his name with a different pen, and hands them all out as souvenirs. Sadly, this made-for-TV moment is not the conclusion of the process it might appear.
There are many ways to kill an infant law, as the devious opponents of the Dodd-Frank Wall Street reforms – signed into law a year ago this week – are demonstrating.
Banks have been trying to carve out as much space for lucrative risk-taking activity as they can, with galling success, such as winning exemptions for certain mortgage-backed securities from the rule that they hold portions of these creations on their balance sheet. Regulators have missed scores of deadlines for the 447 rules they must codify, often because of the complexity of the issues, but sometimes just because of snowing by lobbying organisations.
Worst of all, Wall Street's proxies in Congress are making it harder for regulators to work as fast as is necessary. The SEC and CFTC have had their budgets slashed, under the disingenuous rhetoric of government spending cuts – even though they are funded not by taxpayers, but entirely by a levy on Wall Street. And this week, Senator Richard Shelby said he would block absolutely any candidate for director of the new Consumer Financial Protection Bureau, unless its powers are greatly reduced. The CFPB can't start most of its work until it has a director.
Now, the US Chamber of Commerce, the Obama-baiting lobbyist for America's big corporations, suggests going back to the drawing board to re-examine the regulatory structure entirely, in a cynical move to undermine Dodd-Frank. It knows the perfect is the greatest enemy of the good, which is why it is backing the perfect.
But there may be the seeds of a big deal here. The newly created council of regulators could push for consolidation of regulatory agencies. If Wall Street really wants such reforms and a genuinely 21st century regulatory structure – in the medium-term, when the problems revealed by the credit crisis are fixed – it should agree in return now to stop trying to smother Barney Frank and Christopher Dodd's infant legislation.Reuse content