One year into the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, regulators need to work to ensure the future competitiveness of the U.S. market as the watershed legislation takes shape, industry officials said Wednesday.
Since the Dodd-Frank act was first put in place last year, 38 new rules have been finalized as of July 1, while 215 rules have not yet been proposed, T. Timothy Ryan Jr., president and chief executive of the Securities Industry and Financial Markets Association said in his opening remarks at the industry organization’s regulatory reform summit in New York.
While 26 deadlines have already been missed, 122 other rulemaking deadlines are coming up in the third quarter. Those deadlines come as regulators and the financial industry grapple with challenging conditions, Ryan said, from an unstable economic environment to multiple regulators sharing jurisdiction over the same markets and products.
Almost exactly one year ago, SIFMA Chairman John Taft sat down with On Wall Street to discuss the myriad ways new regulations would or could impact financial advisors and how regulatory reform might change the way advisors operate.
But thus far, significant change has yet to materialize as Congress, the Securities and Exchange Commission, FINRA and lobbyists from all corners of the financial services industry struggle to work out key details concerning everything from where the money to establish and enforce new regulations will come from to the precise definition of a fiduciary.
“We’re not here to say don’t do anything. We support regulatory reform and Dodd-Frank,” Ryan said. “But we do believe as new regulations are created they must balanced and consistent, and if that requires taking a little bit more time to do a study or review in order to get the rules right, then that’s what they should do. Take more time.”
Part of taking more time should include looking to make sure that a rule aimed at limiting systemic risk does not completely limit credit, a threat that no one is looking at, Ryan said. And to also help ensure U.S. competitiveness, Ryan urged the new Financial Stability Oversight Council to carefully consider the impact of regulations both in the U.S. and abroad.
“We cannot unilaterally impose restrictions on institutions in the U.S. markets that do not apply in other major financial markets around the world, creating unnecessary barriers to market entry and putting U.S. financial markets and economies and individuals who rely on their depth and liquidity at a disadvantage,” Ryan said. “We cannot risk the financial competitiveness of U.S. markets, nor can we risk the competitiveness of global markets.”
The reputation of the U.S. financial market is at stake with Dodd-Frank’s implementation, Mary J. Miller, assistant secretary for financial markets at the U.S. Department of the Treasury also said in her address to the conference audience on Wednesday afternoon. Because of that, U.S. regulators must be expeditious with rulemaking, Miller said, and make sure that all of Dodd Frank is put in place to prevent costly future lapses or crises in the markets.
“While we want to move as quickly as possible, our first priority will always be to get it right,” Miller said. “I would like to emphasize that there is more certainty today than there was a year ago, and there will be even more clarity one year from today. We are committed to striking the right balance between assuring safety and soundness and promoting growth and innovation.”
Part of ensuring the best outcome for each rule has meant advocating active communication with the financial industry and investors. The Volcker Rule alone generated 8,000 responses, Miller said, while other rules have been reopened beyond their first response period for more feedback. SIFMA has filed more than 100 comment letters since the Dodd-Frank rulemaking began, according to Ryan.
The Dodd-Frank debate was not the only regulatory issue that had a major role on Wednesday, as regulators in Washington are still preoccupied with the debt ceiling debate. The debt negotiations have forced the government to operate under “extraordinary measures” for about two months, Miller said, while the debt limit will be raised by the August deadline, if not sooner.
“I think the president is really committed to going for a very large and significant deficit reduction package, so that continues to be the primary goal here,” Miller said.