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Two recent reports document anew the failure of federal agencies to meet the extensive rulemaking requirements of the Dodd–Frank statute. The regulatory backlog highlights how unworkable the law is for both bureaucrats and businesses.
As of February 1, a total of 63 percent of the rulemaking deadlines have been missed, according to the Dodd–Frank progress report issued last week by the law firm of Davis Polk. Only 37 percent of some 400 required rules overall have been finalized.
The Government Accountability Office (GAO), in a similar report released January 23, cited “the number and complexity” of the financial regulations as reasons for the delays. For example, there are 4,000 distinct tasks for traders amid the 1,979 pages of swaps regulations issued to date by the Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC). And the CFTC’s draft rules on proprietary training contained 750 unresolved issues.
If regulatory agencies are finding the rulemaking too onerous to manage, imagine the burden of compliance on the financial services industry and its customers.
Further complicating matters is the recent decision by the U.S. Court of Appeals for the D.C. Circuit that President Obama’s supposed recess appointments to the National Labor Relations Board were invalid. Although the case did not include the appointment of Richard Cordray as director of the Consumer Financial Protection Bureau, there is little legal difference between the two. Consequently, at least nine rules affecting major sectors of the financial industry—including mortgages—will likely be invalidated.
Messrs. Dodd and Frank have both left Congress, thus leaving their colleagues and the rest of the country to wrestle with their namesake legislation. The latest updates from Davis Polk and the GAO provide yet more proof that the law should likewise be retired.
Tom Toth is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit http://www.heritage.org/about/departments/ylp.cfm.