SEC Chiefs Exit May Stall Dodd-Frank Rules Including Volcker
December 12, 2012
When the rule was eventually proposed in August, Aguilar voted no, but the rest of the commission voted yes. Walter said at the time that she had some objections to the proposal and favored tougher disclosures to make the rule safer for investors. The process will now be hers to direct.
Tom Quaadman, vice president of the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness, said his group is eager to see provisions of the JOBS Act finished.
“It may be that some of this stuff is intentionally being slow-walked,” Quaadman said.
A slower approach is fine for other rules, he added, including those regulating the SEC’s share of the $639 trillion global swaps market. The CFTC oversees the bulk of the market and has outpaced the SEC in writing regulations. The SEC still has several rules to finish for its oversight of security-based swaps, which includes some of the kind of credit-default swaps that helped fuel the 2008 financial crisis.
“It may be in everyone’s interest that it takes a little longer to get something done,” Quaadman said.
Law firm Davis Polk & Wardwell LLP has been tracking Dodd- Frank progress, and its latest report last week shows the SEC has finalized just 32 of the 95 rules the 2010 law required. In the first year after the law was enacted, the agency averaged nine votes a month to propose or adopt rules. The pace slowed by about half after the federal-court rejection of a rule for insufficient cost-benefit analysis.
Now vulnerable to similar challenges, the SEC redoubled efforts to study cost-benefit effects. In the last 12 months, the agency has proposed nine rules and finalized 22, including routine administrative actions. It’s been more than three months since the SEC adopted a Dodd-Frank rule.
John Nester, an SEC spokesman, declined to comment on how leadership changes could affect specific rulemaking efforts.
“The commission and staff are working hard, as we’ve stated before, to write effective rules as quickly as possible - - with the emphasis on effective,” he said.
Ira Hammerman, general counsel for the Securities Industry and Financial Markets Association, is optimistic that rules such as swaps regulation and Volcker -- those already under lengthy discussion and legally mandated -- can be finished by the commissioners.
“They will rise above and find a way to regulate in the areas that are already on the table,” he said in an interview.
Roper said the Republican Party has made it clear it aims to counter the 2010 financial overhaul through inaction.
“On Dodd-Frank, they can just say no, and that works for them,” she said. “Clearly, the broader Republican agenda since the 2010 election has been to prevent the effective implementation of Dodd-Frank.”
The agency has yet to propose some Dodd-Frank rules on executive pay -- one for clawing back bonus money from executives when their companies have to restate earnings and one that reports the ratio between the pay of each public company’s chief executive and its median employee. The regulator has likewise failed to propose a new standard for brokers dealing with retail clients -- a fiduciary duty parallel to one for investment advisers.