July 22, 2011
Dodd-Frank @ 1: An Overall Assessment
Posted by Brett McDonnell

So far, our posts have focused on individual rules and agencies.  Can we make any sort of sensible overall assessment of the implementation of Dodd-Frank so far?  It is still pretty early.  Many of the rules have yet to be written or finalized.  And there are already so many rules, written by so many agencies, that it is hard for any one person to get an overall picture.  I certainly have not kept up enough to do that.  Via Ann Graham, a good tool for trying to keep up is at the St. Louis Fed web site.  Davis-Polk is usefully surveying the rules on the simple question of whether or not the agencies are completing the rules in a timely way (short answer: they have missed a fair number of deadlines but not too bad so far, but the biggest crunch is about to hit now).

The general mood seems to be that the rule-writing isn't going very well, either because of the sort of industry capture problem on which Kim has focused or because the sheer scale and scope of the task is just beyond the capability of the agencies.  Some of the rules I have looked at do little more than re-formulate the guiding statutory language, adding little detail or precision.  That, for instance, describes the rule on the quite important issue of defining the systematically important financial companies that will be subject to new regulation under Title I.  But Mike Konczal at Rortybomb has an interesting interview with an anonymous but clearly well-informed lawyer who is relatively positive about the state of rulemaking so far.  Who knows?  I continue to believe that the heavy delegation to agencies was simply unavoidable given Congress's lack of expertise and the sheer scope of what needed to be done, but it may well turn out that the problems are too much for the agencies as well.

While I still have the mike, let me briefly lament the D.C. Circuit's vacating of the proxy access rule.  I have my own reservations about the rule, in particular the SEC's failure to allow shareholders to opt out in any way they choose.  Still, I think it's on balance a pretty sensible and defensible rule.  The SEC's documents proposing and finalizing the rule are about extensive as I have ever seen from that agency, and they had voluminous comments from all sides to help guide them.  The D.C. Circuit cherrypicks areas where it asserts the SEC didn't do enough.  It will almost always be possible to do that with any agency rulemaking.  Requiring that level of deliberation could well make the task of rule-writing for Dodd-Frank more daunting still.  This opinion is little more than the judges ignoring the proper judicial rule of deference to an agency involved in notice-and-comment rulemaking and asserting their own naked political preferences.  Talk about judicial activism.

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