New laws and regulation empowers regulatory agencies, requiring significant addition to both staffs and budgets.
Some reported “growth” numbers; please don’t read our syntax as being critical of Dodd-Frank as real, enforceable regulation is required.
- The Securities Exchange Commission, charged with regulating credit rating companies, brokerage firms, hedge funds, trading of derivatives, and corporate boards of directors, is expected to conduct 20 separate studies of important financial issues and then promulgate 100 separate rules.
- The Federal Reserve Board, responsible for regulating systemically risky companies and proprietary trading limits for banks, will author an expected 50 rules.
- The Federal Deposit Insurance Corporation which is responsible for the liquidation and winding up of insolvent banks, will issue new capital rules for community banks.
- The Secretary of the Treasury will chair the newly minted Financial Stability Oversight Council (known in FedSpeak as the “F-Sock”) responsible for monitoring systemic risk. The Treasury department will be responsible for setting up the new consumer protection bureau. It has been reported that the Federal Reserve has 350 projects, including 50 rules, on its hit list.
This will be a long and complex process and as always, the “devil will be in the details."