WASHINGTON Jan 23 The U.S. financial regulatory
system remains fragmented two and a half years after Congress
passed the Dodd-Frank law, and time-consuming coordination among
regulators has stalled its biggest reforms, a government
watchdog said in a report on Wednesday.
The U.S. Government Accountability Office said that as of
December, regulators had finished fewer than half of the new
rules called for by the 2010 law, which lawmakers crafted in
response to the 2007-2009 U.S. financial crisis.
The Dodd-Frank law gave regulators new oversight of the $650
trillion over-the-counter swaps market, called for tough new
rules to prevent banks from speculating with their own money,
and sought to end "too big to fail" by creating a path for
regulators to wind down giant, failing banks.
The complexity and interconnected nature of some required
rules has caused regulators to get behind, as has the
coordination required for multiple agencies to agree on joint
Also, Dodd-Frank did little to streamline the overlapping
organizational chart of financial regulation, which includes
numerous federal and state supervisors, the GAO observed.
"The implementation of many of these reforms remains ongoing
and the effectiveness of some remains an open question," the GAO
said. The group consulted private and regulatory data and
interviewed regulators to compile the report. It did not make
Financial regulators have pushed out dozens of new rules
called for by Dodd-Frank, but they are behind on some of the
A controversial ban on proprietary trading known as the
"Volcker rule" was supposed to take effect in July 2012.
The five agencies responsible for the rule -- the Securities
and Exchange Commission, Federal Reserve, Commodity Futures
Trading Commission, Federal Deposit Insurance Corp and Office of
the Comptroller of the Currency -- have not finished writing it.
Officials also have not spelled out how new U.S. rules for
swaps trades would apply overseas. Nor have they designated any
non-bank financial firms for heightened supervision or
implemented an international agreement requiring banks to hold
Some rules have been held up while regulators waited for
other agencies to craft similar rules. And the GAO said other
regulations require coordination among agencies and with
international regulators, which can be time-consuming.
"Although regulators have established mechanisms to
facilitate coordination and believe coordination efforts have
improved the quality of the rulemakings, several regulators
indicated that coordination increased the amount of time needed
to finalize rulemakings," the report said.
Elisse Walter, chairman of the Securities and Exchange
Commission, said in response to the report that implementing
Dodd-Frank has been a "major undertaking" but that the SEC has
made considerable progress implementing the law.