OBAMA 2.O / FINANCIAL REFORM
include getting that fifth SEC
commissioner in place and making sure Commodity Futures Trading Commission Chairman Gary
Gensler, the reformers’ favorite
Wall Street regulator, gets another
term after his current stint ends
in 2013.
The problem, though, is that
even if you get good people in key
positions, the agencies will be understaffed relative to the banks and
lobbying firms they’re opposing.
“The CFTC is radically underfunded,” said Stanley. “Their
personnel count is roughly pretty
similar to the mid-1990s, and
Dodd-Frank has increased their
workload by eight-fold.”
Five: Loophole-Free
Derivatives Regulation
Perhaps even more important
than fixing the problem of toobig-to-fail banks is making sure
regulators can keep tabs on the
exotic derivatives that contributed to the last crisis, from credit
default swaps (CDS) to collateralized debt obligations (CDO) to
CDOs stuffed with CDSs.
Again, Dodd-Frank has rules
for that, but banks are pushing
hard for a way out. Republicans
last year introduced HR 3283, the
HUFFINGTON
01.27.13
Swap Jurisdiction Certainty Act,
which would exempt overseas derivatives trades from Dodd-Frank
rules as long as they were routed
through a foreign subsidiary.
The bill is in limbo, but it’s just
one of many examples of banks
tirelessly working to carve loop-
“Part of the lobbying strategy is to wear
you down, drag it out, until people
get frustrated and lose confidence in
regulators to do anything.”
holes into obscure corners of the
law dealing with obscure matters,
where they can quietly make tons
of money, while leaving the financial system at risk.
If anything is certain in
Obama’s second term, it is that
this will continue.
“Part of the lobbying strategy is
to wear you down, drag it out, until people get frustrated and lose
confidence in regulators to do anything and the pressure subsides,”
said Bair. “That’s why it’s important that this stuff get done soon,
not later, and as cleanly and effectively as possible.
“You will never make this industry happy,” Bair warned of
banks. “They will always
want more.”