Pointing to the fact that three years after the enactment of Dodd-Frank important unresolved issues arising from the Act remain unresolved, including derivatives and proprietary trading, former Federal Reserve Board Chair Paul Volcker said that the U.S. does not need six federal financial regulatory agencies, which he called a recipe for indecision, neglect, and stalemate, adding up to ineffectiveness. In remarks at the Economic Club of New York, he noted that, while Dodd-Frank did create the Financial Stability Oversight Council as a mechanism to coordinate regulation, the regulatory landscape was essentially left intact by the reform legislation.
The result is that the U.S. is left with six very distinct federal financial regulators, he said, each with their own mandate, their own institutional loyalties and Congressional support networks, along with a cadre of lobbyists equipped with the capacity to provide for campaign financing.
Even beyond the Dodd-Frank Act, he continued, a consensus for action among the SEC and treasury on the reform of money market mutual funds has not been found, even though new legislation is needed to effect such a reform. Similarly, progress towards international accounting standards is stalled and any meaningful reform of the credit rating agencies regulatory regime has not been forthcoming.
The lack of agreement on key regulations is unacceptable, emphasized chairman Volcker, who added that the current regulatory overlaps and loopholes play into the hands of industry lobbyists who resist change, In turn, this undercuts the need of the financial markets for clarity The time has come for change, he concluded.