CLE Materials for Panel #1 - George Washington University Law ...

WILMARTH
4/1/2011 1:11 PM
1012 OREGON LAW REVIEW [Vol. 89, 951
have also noted that LCFIs skillfully engaged in global regulatory
arbitrage by threatening to move operations from the United States to
London or to other foreign financial centers if U.S. regulators did not
make regulatory concessions. 257
Fifth, Dodd-Frank does not provide specific instructions about the
higher capital requirements and other enhanced prudential standards
that the FRB must adopt. Instead, Dodd-Frank sets forth general
categories of supervisory requirements that the FRB either must or
may address. 258 Thus, the actual achievement of stronger prudential
standards will depend upon implementation by the FRB through rule
making, and LCFIs have marshaled an imposing array of lobbying
resources to persuade the FRB to adopt more lenient rules. 259 When
Congress passed Dodd-Frank, the head of a leading Wall Street trade
association declared that “[t]he bottom line is that this saga will
continue,” and he noted that there are “more than 200 items in [Dodd-
Frank] where final details will be left up to regulators.” 260
257 Coffee, supra note 239, at 18–21; Gordon & Muller, supra note 200, at 27.
258 See supra notes 234–35 and accompanying text; see also Stacy Kaper, Now for the
Hard Part: Writing All the Rules, AM. BANKER, July 22, 2010, at 1 (stating that although
Dodd-Frank will “require the Fed to impose tougher risk-based capital and leverage
requirements, it is unspecific about how this should be done”).
259 See Binyamin Appelbaum, On Finance Bill, Lobbying Shifts to Regulations, N.Y.
TIMES, June 27, 2010, at A1 (noting that “[r]egulators are charged with deciding how
much money banks have to set aside against unexpected losses, so the Financial Services
Roundtable, which represents large financial companies, and other banking groups have
been making a case to the regulators that squeezing too hard would hurt the economy”);
see also Kaper, supra note 258; Congress’s Approval of Finance Bill Shifts Focus to
Regulators, BLOOMBERG BUSINESSWEEK (July 16, 2010), http://www.businessweek.com
/news/2010-07-16/congress-s-approval-of-finance-bill-shifts-focus-to-regulators.html.
260 Randall Smith & Aaron Lucchetti, The Financial Regulatory Overhaul: Biggest
Banks Manage to Dodge Some Bullets, WALL ST. J., June 26, 2010, at A5 (quoting, in
part, Timothy Ryan, chief executive of the Securities and Financial Markets Ass’n); see
also Edward J. Kane, Missing Elements in U.S. Financial Reform: A Kubler-Ross
Interpretation of the Inadequacy of the Dodd-Frank Act 7 (Nat’l Bureau of Econ.
Research, Working Paper 2010), available at http://papers.ssrn.com/sol3/papers.cfm
?abstract_id=1654051 (“During and after what will be an extended post-Act rulemaking
process, decisionmakers will be opportunistically lobbied to scale back taxpayer and
consumer protections to sustain opportunities for extracting safety-net subsidies. . . .
Financial-sector lobbyists’ ability to influence regulatory and supervisory decisions
remains strong because the legislative framework Congress has asked regulators to
implement gives a free pass to the dysfunctional ethical culture of lobbying that helped
both to generate the crisis and to dictate the extravagant cost of the diverse ways that the
financial sector was bailed out.”); Kaper, supra note 258 (reporting that, “[b]y some
estimates, federal regulators must complete 243 rules, . . . along with 67 one-time reports
or studies and 22 periodic reports” in order to implement Dodd-Frank’s mandates).