The sluggish implementation of the Dodd-Frank financial reform law has made it “impossible” for businesses to “know the rules of the road,” charges the U.S. Chamber of Commerce in a new scorecard obtained first by The Hill.
The nation’s largest business lobby said it has major concerns about how the financial reform law is playing out, nearly two years after President Obama signed it into law.
“At each stage of the Dodd-Frank Act implementation … business has been told, ‘Don’t worry, we will get this right,’ ” the Chamber wrote in the report. “Well, we are now down to implementation, and the rulemaking process and regulators have not ‘gotten it right.’ They continue to fight among themselves, propose conflicting approaches to common issues and otherwise make it impossible for honest market participants to know the rules of the road.”
The Chamber has long criticized Dodd-Frank as a regulatory avalanche, and stressed the uncertainty surrounding the law in the scorecard. Out of the 17 portions of Dodd-Frank graded by the Chamber, all but two received some sort of “incomplete” grade.
“The things that really matter most to the broadest spectrum of companies are still pending,” said David Hirschmann, president and CEO of the Chamber’s Center for Capital Markets Competitiveness. “We’re almost two years into the regulatory process, and we still don’t know.”
While the delays increase uncertainty for business, Hirschmann said the Chamber is “admittedly schizophrenic.” The delays carry their own challenges, but they are preferable to regulators rapidly writing haphazard rules.
The Chamber awarded an “A” grade to two sections of the law that have not worked out as lawmakers might have planned.
In one case, regulators were thwarted from implementing a portion of the law that would have given investors in public companies more input. The courts struck it down.
The other “A” grade was assigned to a section on corporate disclosures that was substantially delayed after pressure from the Chamber and other groups.
“We’re simply grading the outcome, and will it help or hurt Main Street,” said Hirschmann.
No portion of the law received a failing grade, which would be proof of “economically harmful reform,” according to the Chamber.
The business group called the law “an incomplete bill passed in haste,” but seems to be focusing its efforts, for now, on the regulators that are enforcing it, rather than lawmakers who could change it.
From the Volcker Rule to the Consumer Financial Protection Bureau (CFPB) to new regulations on derivatives or executive compensation, the business lobby is weighing in strongly on the work being done to carry out Dodd-Frank.
The group is calling for a fresh start on the Volcker Rule, the highly contentious chunk of the law that bans profit-seeking trades by banks using their own cash. Regulators have already proposed one way to implement the rule and received roughly 17,000 public comments in response. The Chamber called that proposal “overbroad and … unnecessarily complex,” and regulators have indicated they will likely miss the July deadline for finalizing it.
The CFPB has technically been in action since last July, but it has only enjoyed its full power since the beginning of the year, after President Obama controversially recess-appointed Richard Cordray to serve as its first director. But the Chamber argued that the appointment casts a cloud of doubt over the bureau, as potential legal challenges to it could render CFPB actions under Cordray invalid.
Accompanying each grade from the Chamber is a series of recommendations for how the pieces of Dodd-Frank could be improved. In an indication of where the group believes changes could actually be made, the majority of these suggested tweaks are directed at regulators, not lawmakers.
“This is the year where even renaming post offices is not easy legislatively,” Hirschmann said. “Of course our focus is primarily on the regulators.”
Republicans, especially those in control of the House, are advancing measures that would alter or repeal specific provisions of the law. On Monday evening, the House was set to take up bipartisan bills that would relax regulations on derivatives, as well as one making minor changes to the CFPB’s policies. But with Democrats still in control of the Senate, the measures are unlikely to reach the White House.