OBAMA 2.O / FINANCIAL REFORM
tally by the law firm Davis Polk,
just a third of Dodd-Frank’s rules
are done. Only about half of the
law’s rules for derivatives have
been finalized. Only about a quarter of the rules for winding down
troubled banks are in place. Less
than 10 percent of the bank regulations are done.
The Securities and Exchange
Commission is still on the hook
for finishing dozens of rules. But
the process has ground to a halt
with the departure of former
chairman Mary Schapiro, leaving
only four commissioners on the
SEC: two Democrats who will vote
to put rules in place and two Republicans who often won’t.
“We need three votes to get
rules through, or Dodd-Frank will
be crippled,” said Greenberger.
Three: Solve Too Big to Fail
One reform concept with bipartisan support is the idea that the
biggest banks are still too big to
fail — in fact, they are bigger than
before the crisis. The five biggest
U.S. banks held about $8.7 trillion
in assets at the end of the third
quarter, the latest data available,
or about 55 percent of the entire
U.S. annual gross domestic product. That’s up from about 43 per-
cent before the crisis, Bloomberg
noted recently.
Dodd-Frank offers at least two
possible solutions to this problem, according to Marcus Stanley,
policy director at the nonprofit
Americans For Financial Reform:
higher capital requirements for big
banks, and the so-called Volcker
Rule, which prohibits banks from
gambling with their own money.
Both provisions could force big
banks to get smaller, hiving off
trading operations or other parts
that make them too bulky. So far,
neither provision has been finalized, and the Volcker Rule has
been riddled with exemptions before it even takes effect.
Four: Get the Right People in Place
Though Lew may not eventually
run the Treasury as a natural-born
regulator, he should at least have a
top deputy who will play the role
of riding herd on regulation in a
second term, many reformers said
— someone to speak up for DoddFrank, rebut bank lobbyists and
understand the risks lurking in
the system. The reported top pick
to be Lew’s No. 2, Morgan Stanley
chief financial officer Ruth Porat,
has the necessary expertise, but
has lobbied regulators frequently
on behalf of Wall Street since
Dodd-Frank’s passage.
Other key personnel decisions
HUFFINGTON
01.27.13