While lawmakers generally acted like the fighting was finished when the law was signed on July 21, everyone knew it was just the beginning. At 2,300 pages, the law left most of the heavy lifting to some 30 different federal agencies, which had to write roughly 400 rules or studies, more than half of them not due until 2012 or later.
Since then, regulators have issued 121 proposals, finalized 38 of them, and missed 26 deadlines, according to estimates by the law firm Davis Polk.
But numbers do not tell the whole story, due to the varying complexity of some rulemakings compared with others. Looking at the big picture items, it is clear there have been significant strides in some areas, while others have stalled or been ignored entirely.
Democratic Rep. Barney Frank, one of the law's principal authors, said while lawmakers who opposed the bill are still criticizing it, there is nothing major standing in the way of implementation. Overall, Frank said he is pleased with the progress over the past year.
"The Republicans have had a number of hearings" but "there have been very few calls for any substantial amendment on the part of the financial services community," he said.
In this article, we focus on issues where regulators have made critical progress, while the next story will detail much of the work still left unfinished.
Capital and Leverage Standards
Capital received relatively short shrift in Dodd-Frank, largely because lawmakers knew the Basel Committee on Banking Supervision was tackling the issue and were reluctant to put U.S. firms at a competitive disadvantage by setting higher standards.
Still, international regulators moved much faster and more aggressively than many expected.
"I think we've moved quite far and rather quickly on the new post-crisis capital regime — farther and faster than I think anyone would have anticipated a year ago," said John Dearie, executive vice president at the Financial Services Forum.
Under a proposal issued last year, banks would have to hold 4.5% in common equity by 2015, and an additional 2.5% conservation buffer by 2019. On July 2, international regulators said they would propose forcing the largest banks to hold even more capital, tacking on an extra 1% to 2.5% as a systemic surcharge.
International regulators also issued a proposal last year designed to ensure banks have adequate liquidity when the next financial crisis occurs. The proposal would require banks to ensure outflows are matched by inflows in the event of a run on the banks during a short-term financial stress that lasts no more than 30 days.
Both the capital and liquidity plans have drawn plenty of fire, with big banks in particular saying they went too far and would constrain lending and economic growth. House Republicans have written to regulators raising concerns about the capital plan, suggesting lawmakers may seek to revisit the issue.
As it relates to Dodd-Frank, meanwhile, the capital provisions are largely implemented. Regulators finalized a rule earlier this year that implemented the Collins amendment, which establishes a capital floor for all banks and stricter criteria for what counts as Tier 1 capital. (The provision was authored by Sen. Susan Collins, R-Maine.)
To be sure, the Basel III process is far from finished, and regulators may opt to alter requirements. But for now, the capital picture is much clearer than it was a year ago.
Policymakers claim that the primary reason that bailouts were necessary in 2008 was the lack of legal tools to resolve large, failing financial firms such as AIG.
Dodd-Frank sought to remedy this problem by giving the government the ability to unwind such companies, a key way to eliminate the perception of "too big to fail."
Regulators have made laudable progress in laying out a framework for the new powers. The Federal Deposit Insurance Corp. has already finalized rules providing clarity about the relief and claims priority for creditors, and a joint proposal in March from the FDIC and Federal Reserve Board would require "living wills" from large financial firms. Officials say they expect a final living will regulation by August.
The FDIC has also formed a blue-ribbon committee of experts, including former Federal Reserve Board Chairman Paul Volcker, dedicated to studying ways to best resolve a huge firm.
Mark Zandi, chief economist at Moody's Analytics, praised the FDIC's progress. "I think they'll do a good job in terms of resolving large, troubled institutions, and I think they're well down the path of doing that," he said.