NYT editorial: How to Derail Financial Reform

Ever since the Dodd-Frank financial reform law was signed in July, the question has been whether it would actually lead to a stable financial system. If the Republicans who will control the House next year get their way, the answer will surely be “no.”

The legislation requires regulators to write hundreds of rules to put the law into effect. To their credit, regulatory agencies have begun that process with a sense of mission and depth of expertise that was missing in the years before the financial crisis.

In particular, the Securities and Exchange Commission and the Commodity Futures Trading Commission — which share the all-important regulation of the multitrillion-dollar derivatives market — have proposed rules that are tough and sophisticated. The new Consumer Financial Protection Bureau is ramping up. The Financial Stability Oversight Council, led by the Treasury secretary, will report in January on how to implement the “Volcker rule” to restrict proprietary trading by banks.

The process is painstaking, and the outcome is uncertain. But progress is being made — and the House Republican leaders want none of that. Representative Spencer Bachus of Alabama, the next chairman of the House Financial Services Committee told The Birmingham News that “Washington and the regulators are there to serve the banks.” He later said he meant regulators should set parameters, not micromanage banks, yet he seems to prefer the parameters that were in effect before the crisis when regulators did serve the banks.

(More here.)