Rule Phase of Reg Reform Promises to Be Grueling

By Joe Adler


Even if lawmakers sign off as expected on a final regulatory reform bill before the July 4 recess, the battle over the legislation will just be a prologue to the longer and much more complicated fight over how the legislation will be implemented. If conference negotiations produce a law similar to the Senate version of reform, the industry and regulators face a gargantuan task of enacting roughly 120 required rules, not to mention completing scores of mandated reports. Observers said the assignment for the financial agencies will be unprecedented in recent decades, eclipsing past government overhauls, such as the implementation of post-Sept. 11 changes and the Sarbanes-Oxley law. The new bill calls for not only extensive agency collaboration, but rules from new bodies that must first be created. “It’s a very, very big, and quick, pile” of rules, said Karen Shaw Petrou, the managing partner of Federal Financial Analytics Inc. “The thing to focus on is not just the number of rules, but the speed with which most of this bill is to be implemented. The new resolution process essentially takes effect upon enactment, and there’s no experience with it. The whole process is dramatically different, and it comes at a time obviously of ongoing significant systemic fragility.”