Issue of the week: Is Dodd-Frank being undermined?

Many of the provisions in the 2,319-page bill are under attack by special interest groups.

A year after President Obama signed it with great fanfare, the Dodd-Frank Wall Street Reform and Consumer Protection Act “remains a source of anxiety and frustration,” said Joan Quigley in The Bond Buyer. Municipal-bond issuers and buyers are no clearer than they were a year ago on how provisions in the 2,319-page bill will remake their market. They are hardly alone, said Alexander Eichler in HuffingtonPost​.com. A report this week by Standard & Poor’s suggested that one of the bill’s chief provisions, which lays out the rules for how troubled banks could be liquidated in an orderly way instead of bailed out by the government, “might not work in all cases.” The new report only strengthened fears that the new law would fall short of its goal to “prevent too-big-to-fail scenarios” like the ones that triggered the bailouts of the nation’s biggest banks in 2008.

The abiding confusion over Dodd-Frank stems in large part from politicians’ fawning eagerness to “please a paying audience,” said Dan Janison in Newsday—namely, Wall Street. Last month, for instance, New York’s two Democratic senators, and much of its congressional delegation, warned federal officials that Dodd-Frank’s provisions to regulate sales of financial derivatives would “give U.S. banks a competitive disadvantage.” It’s hardly remarkable that they would come to the defense of jobs on Wall Street, of course. But there’s some irony in the Democrats’ willingness to work “in tandem with what you might call the financial deregulation community.”

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