Interesting Article on the Financial Reform Bill

[BRANDON ROSS 0]

It's a long article, but I think the bolded part best describes a major problem with most regulation. The companies being regulated have more influence in the actual construction of the regulation than the people the regulations are meant to protect.

 

http://online.wsj.com/article/SB10001424052748704288204575363162664835780.html?mod=googlenews_wsj

 

 

 

So Republicans Scott Brown, Olympia Snowe and Susan Collins now say they'll provide the last crucial votes to get the Dodd-Frank financial reform through the Senate. Hmmm. Could this be Minority Leader Mitch McConnell's secret plan to take back the Senate, guaranteeing another year or two of regulatory and lending uncertainty and thus slower economic growth?

 

Probably not, but that still may be the practical effect. This week White House aides leaked to the press that President Obama may seek a review of regulations that are restraining business confidence and bank lending. Yet Dodd-Frank, with its 2,300 pages, will unleash the biggest wave of new federal financial rule-making in three generations. Whatever else this will do, it will not make lending cheaper or credit more readily available.

 

In a recent note to clients, the law firm of Davis Polk & Wardwell needed more than 150 pages merely to summarize the bureaucratic ecosystem created by Dodd-Frank. As the nearby table shows, the lawyers estimate that the law will require no fewer than 243 new formal rule-makings by 11 different federal agencies.

 

The SEC alone, whose regulatory failures did so much to contribute to the panic, will write 95 new rules. The new Bureau of Consumer Financial Protection will write 24, and the new Financial Stability Oversight Council will issue 56. These won't be one-page orders. The new rules will run into the hundreds if not thousands of pages in the Federal Register, laying out in detail what your neighborhood banker, hedge fund manager or derivatives trader can and cannot do.

 

 

Finance Overhaul Casts Shadow on Plains Details: What's in the Bill Corporate Checking Gets Interest Financial Bill Nears Senate Vote As the Davis Polk wonks put it, "U.S. financial regulators will enter an intense period of rule-making over the next 6 to 18 months, and market participants will need to make strategic decisions in an environment of regulatory uncertainty." The lawyers needed 26 pages of flow charts merely to illustrate the timeline for implementing the new rules, the last of which will be phased in after a mere 12 years.

Because Congress abdicated its responsibility to set clear rules of the road, the lobbying will only grow more intense after the President signs Dodd-Frank. According to the attorneys, "The legislation is complicated and contains substantial ambiguities, many of which will not be resolved until regulations are adopted, and even then, many questions are likely to persist that will require consultation with the staffs of the various agencies involved."

 

In other words, the biggest financial players aren't being punished or reined in. The only certain result is that they are being summoned to a closer relationship with Washington in which the best lobbyists win, and smaller, younger firms almost always lose. New layers of regulation will deter lending at least in the near term, and they are sure to raise the cost of credit. Non-blue chip businesses will suffer the most as the financial industry tries to influence the writing of the rules while also figuring out how to make a buck in the new system.

 

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Associated Press

The timing of Dodd-Frank could hardly be worse for the fragile recovery. A new survey by the Vistage consulting group of small and midsize company CEOs finds that "uncertainty" about the economy is by far the most significant business issue they face. Of the more than 1,600 CEOs surveyed, 87% said the federal government doesn't understand the challenges confronting American companies.

 

Believe it or not, Mr. Frank has already promised a follow-up bill to fix the mistakes Congress is making in this one. In a recent all-night rewrite session, he and Mr. Dodd made a particular mess of the derivatives provisions. They now say they didn't really mean to force billions of dollars in new collateral payments from industrial companies on existing contracts that present no systemic risk. But that's precisely what the regulators could demand under the current language, and the courts will ultimately decide when everyone sues after the new rules are issued.

 

Taxpayers might naturally ask why legislators don't simply draft a better bill now. But for Democrats the current and only priority is to pass something they can claim whacks the banks and which they can hail as another "achievement" to sell before the elections.

 

More remarkable is that a handful of Republicans are enabling this regulatory mess. Mr. Brown and Ms. Collins say they now favor Dodd-Frank because Congressional negotiators agreed to drop the bank tax. But lawmakers didn't drop the bank tax. They only altered the timing and manner of its collection. Instead of immediately assessing a tax on large financial companies to pay for future bailouts, the final version simply authorizes the bailouts to occur first. The money to pay for them will then be collected via a tax on the remaining firms.

 

Because this tax will be collected by the Federal Deposit Insurance Corporation, even opponents of the bill have viewed it as part of an insurance system. It isn't. Insurance is when you pay a premium and the insurance company agrees to replace your house if it burns down. A tax is when you pay the government and then the government decides which houses it wants to replace when there is a fire in the neighborhood.

 

Under Dodd-Frank, if Firm A pays to cover the cost of the last bailout, there's no guarantee that the FDIC will rescue its creditors if Firm A fails in the future. This is fundamentally different from traditional deposit insurance, which guarantees the same deal for every bank customer. Dodd-Frank allows the FDIC to discriminate among creditors at its discretion.

 

This transfer of wealth is a tax by any reasonable definition, borne by the customers, shareholders and employees of the companies ordered to pay it. Is this how Mr. Brown plans to reward the tea partiers who carried him to victory last winter in Massachusetts? Is this the key to a small business rebound in Maine?

 

A good definition of a bad law is one that its authors are rewriting even before they pass it. The only jobs Dodd-Frank will create are in Washington—and in law firms like Davis Polk.

[giraldi02 470]

Lost in all the Comey back-and-forth...seven years later, Dodd-Frank is now on the verge of being removed.

http://thehill.com/policy/finance/337004-house-passes-sweeping-bill-to-strip-post-recession-banking-rules

[DankNuggs 305]

good

[Sho Nuff 720]

May not pass the senate.

Drainthe swamp alright.

Give to the fat cats at the top with this.

 

And grant a ton of ethics waivers to his people.

[giraldi02 470]

I mean...I kinda hope that the markets crash so I can afford a home. Median home cost here is $660,000. I could use an immediate discount

[Strike 4,026]

Lost in all the Comey back-and-forth...seven years later, Dodd-Frank is now on the verge of being removed.

 

http://thehill.com/policy/finance/337004-house-passes-sweeping-bill-to-strip-post-recession-banking-rules

 

The last time I checked a bill had to pass both the House and Senate, and be signed by the President, to become law. Per your article,

 

The bill is not expected to pass the Senate

 

I wish it would pass though, but not looking like it in it's current form.

[giraldi02 470]

 

The last time I checked a bill had to pass both the House and Senate, and be signed by the President, to become law. Per your article,

 

 

I wish it would pass though, but not looking like it in it's current form.

 

I heard the exact same thing about the AHCA in it's current form just weeks ago, and all indications are now that it's going to be passed through the Senate.