After Year of Progress, Dodd-Frank Rule Phase Hit Roadblocks

By Donna Borak

In the first year after passage of the Dodd-Frank Act, regulators made some progress implementing the law. Now they have essentially ground to a halt. As they implement some of the most complex pieces of the overhaul, the agencies have had a Goldilocks complex: they’re trying to get the new regulatory system just right. They want rules to be tough, but not in a way that stops business, and are aware that an industry facing an uncertain regulatory future is watching their every move. For some of the bigger regulations, such as the trading ban known as the Volcker Rule, the regulators face pressure to meet the Dodd-Frank deadlines. But the lengthy proposal they issued on the rule, which included hundreds of questions for comment, also indicated their intent to methodically consider public concerns about how the ban would be implemented, almost to a fault. Critical events like the multibillion-dollar trading loss at JPMorgan Chase’s London unit, which prompted further debate about the scope of the Volcker Rule, also affected their work. “This is a search for precision in terms of ‘We are going to nail every possible thing in our rule so there is no uncertainty,'” said Karen Shaw Petrou, a managing partner at Federal Financial Analytics. “They are detailed-driven to the point of incoherence.”