Besides Independence Day, July marked another anniversary: one year since Congress passed the most sweeping financial regulatory reforms in history (the Wall Street Reform and Consumer Protection Act). The law is a path forward to address the issues that got us into the economic mess we’re still in.
Contributing to the economic fiasco were lax regulation and the captains of finance. With regulators asleep at the wheel, Wall Street devised all kinds of financial gimmicks. Unregulated trading venues became casinos where bundles of exotic mortgages were bet upon in the form of credit default swaps. They pushed us toward the economic cliff and the eventual downfall of financial behemoths thought of as “too big to fail.”
As we know, it’s not over. Unemployment and housing markets tell us that.
We’ve waited a year. The question is: “Where’s the beef?” Regulators were to fashion implementation rules (the meat on the bones) within one year. That hasn’t happened. Hundreds of rules across numerous agencies languish.
Why have we had to wait? Two reasons.
In Washington there is an old saying: “If you aren’t part of the solution, there’s plenty of money to be made being part of the problem.” That’s at work now. Never in history has there been more money spent lobbying by the financial sector. In fact, there are more than 10 financial lobbyists for each member of Congress.
Remember Church Lady saying “Isn’t that special?” Well, there have been countless lobbyist efforts to seek “special” exemptions from the law.
Still, regulators do want to hear folks out, to ensure that we don’t mess something up that is working well. Unfortunately, that takes time.
So, a second reason for delays is the sheer number of rule-making. This is about getting rules right rather than done fast.
There are, however, some matters that deserve expedited approval. A Commodity Futures Trading Commission rule to limit the influence of speculators in markets was to be completed in January. It would establish a cap on the percentage a speculative trader may hold in a market. The rule is in limbo.
That matters because the prices consumers pay for everything from milk to gas are impacted by these markets.
Studies confirm that when drivers fill up the cars, they pay a premium — a Wall Street speculative premium. With no limits rule, consumers and businesses are harmed.
Tom Petty sang, “The waiting is the hardest part.” After the economic pain we went through, it’s hard not to let the waiting get to you.
Yes, regulators need to implement the law correctly, but they should also put the pedal down so that consumers, markets and our economy don’t have to wait much longer for these needed reforms.
Bart Chilton is a commissioner on the Commodity Futures Trade Commission.
