COMPLIANCE: Capitulation on Financial Reform
Reports surfacing this morning have regulatory reform legislation inching closer to reality. The New York Times is reporting that regulatory reform is gaining “traction.”
So what will the eventual legislation look like? Reading between the lines, here’s what can be expected:
- Treasury will lead the proposed systemic risk council, with the Federal Reserve only taking a subordinate role;
- The proposed Consumer Financial Protection Agency will end up being a subsidiary of another, existing agency — the fight for a standalone enforcement bureau appears to have been lost; and
- The Volcker Rule will be watered down to exempt hedging activities.
Rather than compromise, I’d call this capitulation by the Obama administration. Tack financial regulation on to the list of legislative failures for the administration.
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