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Dodd-Frank: Behind Schedule And Under Scrutiny--- SNL Financial Exclusive

By J. Daniel Young and Jasmine Castroverde

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Politicians fashioned the massive Dodd-Frank Act in a post-crisis world aiming to repair the financial environment through a bold new plan. Yet four years after being signed into law by President Barack Obama, portions of the law's rulemaking requirements are still up in the air, and critics are calling for changes that will rein in the equally massive amount of regulations spun from the law.

As a Davis Polk & Wardwell LLP progress report on the legislation indicates, the deadlines for 280 rulemaking requirements have passed, as of July 18. Of those, 127 deadlines were missed. Of the 398 total required rulemakings contained in the bill, 96 have yet to be proposed

And four years on, supporters and critics alike offer differing and varying views on the future of the act.

The Bipartisan Policy Center released a report outlining 10 solutions for regulators and a separate list of 10 solutions for Congress. Some suggestions, such as a recommendation to increase transparency at the Financial Stability Oversight Council, align with the desires of detractors such as House Republicans in the Financial Services Committee.

But alongside the criticisms of Dodd-Frank, the Bipartisan Policy Center said the law made progress in some areas. A report by the center said that the creation of the significantly important financial institution resolution authority, increased capital requirements, increased oversight of the entire financial system, enhanced consumer protection and extended consumer protection authority to nonbanks, among other actions, were segments of improvement.

Still other observers say that Dodd-Frank was not necessary. Hester Peirce, a senior fellow at the Mercatus Center at George Mason University, told SNL that the power and authority delegated to regulators as a result of Dodd-Frank was the opposite of what should have been done. She contends that the market should hold itself accountable. "If you could replace all the regulations we've done and just have higher capital, you'd have a safer system," she said.

Similarly, attorney Oliver Ireland at Morrison & Foerster said the costs of Dodd-Frank "significantly outweigh the benefits in terms of overall financial stability." He added, "We are looking at a huge piece of legislation, imposing a lot of costs and a lot of changes in the system and it's not clear what the benefits are."

And with so much yet to materialize, the effects of Dodd-Frank are still unknowable, according to Ireland. "The effective dates tend to be off into the future and you don't really see the effects of them until after the effective date," he said. "We are a ways off from seeing what the post-Dodd-Frank financial system looks like."

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.