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

WILMARTH
4/1/2011 1:11 PM
1014 OREGON LAW REVIEW [Vol. 89, 951
intention to oversee and influence the implementation of Dodd-Frank
by federal agencies in order to secure outcomes that were more
favorable to the financial services industry. 264 Thus, notwithstanding
the widespread public outrage created by bailouts of major banks and
Wall Street firms, the continued political clout of LCFIs is
undeniable. 265 For all of the foregoing reasons, as John Coffee has
noted, “the intensity of regulatory supervision” is likely to weaken
over time as the economy improves and “the crisis fades in the
public’s memory” as well as in the memories of regulators. 266 When
the next economic boom occurs, regulators will face escalating
political pressures to reduce the regulatory burden on LCFIs as long
as those institutions continue to finance the boom and also continue to
report profits. 267 Accordingly, while Dodd-Frank’s provisions for
stronger supervision and enhanced prudential standards represent
improvements over prior law, they are unlikely to prevent future
Marriage: Feeling Scorned by the President, Big Business Is Turning to the GOP: How
Fair Is That?, WASH.POST, Sept. 4, 2010, at A16.
264 Benson & Mattingly, supra note 262; Cheyenne Hopkins, Oversight by House GOP
to Shape Rules, AM. BANKER, Nov. 8, 2010, at 1; Stacy Kaper, REVIEW 2010/PREVIEW
2011: Redrawing the Battle Lines on Reform, AM. BANKER, Jan. 3, 2011, at 1; Phil
Mattingly, Derivatives, ‘Volcker’ Rules May Be House Republican Targets, BLOOMBERG
(Nov. 14, 2010), http://www.bloomberg.com/news/2010-11-19/derivatives-volcker-rulesmay-be-house-republican-targets.html.
265 John Cassidy, What Good Is Wall Street?, NEW YORKER (Nov. 29, 2010), http:
//www.newyorker.com/reporting/2010/11/29/101129fa_fact_cassidy; Catherine Dodge,
Banning Big Wall Street Bonus Favored by 70% of Americans in National Poll,
BLOOMBERG (Dec. 12, 2010), http://www.bloomberg.com/news/2010-12-13/banning-big
-wall-street-bonus-favored-by-70-of-americans-in-national-poll.html; Michael J. Moore,
Wall Street Sees Record Revenue in ’09-10 Recovery from Bailout, BLOOMBERG (Dec. 12,
2010), http://www.bloomberg.com/news/2010-12-13/wall-street-sees-record-revenue-in-
09-10-recovery-from-government-bailout.html; Paul Starobin, Too Big To Like?, NAT’L J.,
Sept. 4, 2010, at 17.
266 Coffee, supra note 239, at 21, 20; see also Kane, supra note 260, at 7 (arguing that,
due to the financial sector’s skill in “mixing . . . innovation with well-placed political
pressure,” the strength and effectiveness of Dodd-Frank’s regulatory reforms “are unlikely
to hold up over time . . . [a]s memory of the crisis recedes”).
267 In this regard, Jeffrey Gordon and Christopher Muller observe:
[G]rowing [financial sector] profits seem to attest to the skill and sagacity of
industry participants and increase normative deference to their views. . . . [T]he
added profits generate additional resources for lobbying, campaign contributions,
and media campaigns that not only enhance the industry’s ability to block new
legislation but also to enlist legislative and executive [branch] pressure against
regulatory intervention under existing authorities . . . . [T]he enhanced
profitability of the financial sector typically produces economic spillovers that
add to overall economic growth, which is highly desired by political actors.
Gordon & Muller, supra note 200, at 27.