Dodd-Frank Under Fire a Year Later

Treasury Secretary Tim Geithner has stated that the financial system is "on more solid ground," but there are continued signs that tighter regulatory measures could be undone as uncertainties are raised about how those changes have helped stabilize the markets. Congress is considering about 24 bills to dismantle portions of the Dodd-Frank Act, and President Obama reiterated, "The financial crisis and the recession were not the result of normal economic cycles or just a run of bad luck. There were abuses and there was a lack of smart regulations. So we're not just going to shrug our shoulders and hope it doesn't happen again." Critics have said the Dodd-Frank Act has hampered economic growth given that the unemployment rate is high, but the Dow Jones Industrial Average is up more than 20 percent and small company stocks have risen more than 30 percent since last year. While the benefits of the financial reform law have been mixed, questions remain about the implementation of the Volcker Rule banning proprietary trading among banks, rules governing derivatives, and the creation of rules on determining which financial firms should be considered systemically important and subject to greater scrutiny. Federal Reserve Chairman Ben Bernanke also warned, "Unless we have international consistency, we will not have a level playing field, we'll have opportunities for regulatory arbitrage and the entire reform process will not be effective."

New York Times (07/19/11) P. B1 Wyatt, Edward