Special Section Winter 2012

View all posts

Article Tools

Related Links

• Graphic: How a Rule Becomes a Law (or Not)

Wall Street has found a common enemy: the Dodd-Frank Act. After the industry’s aggressive risk-taking nearly toppled the financial system and the broader economy, Congress ushered in Dodd-Frank, the most significant regulatory overhaul since the Great Depression. Since the law was passed in 2010, banks and other financial institutions have sought to tone down the most onerous aspects of the law, fearful of the threat to their businesses and their bottom line.

Wall Street has reason to fret. The law takes up some 2,300 pages and touches nearly every corner of the banking industry. One section is dedicated to derivatives trading, previously a huge profit center for financial companies. Another portion created the so-called Volcker Rule, which prohibits banks from making certain bets with their own money. Other chunks take aim at lavish bonuses, lax mortgage lending and the credit rating agencies.

As regulators have devised the myriad rules, Wall Street has embarked on an all-out lobbying blitz. The industry has doled out hundreds of millions of dollars, held regular meetings with regulators and bombarded federal agencies with public letters.

The industry’s efforts have proved effective. Despite facing tight deadlines, regulators have completed only a third of the regulations mandated under Dodd-Frank. Another third of the rules are in the proposal phase, and the rest are in limbo.

While Dodd-Frank is not going away, Wall Street is finding ways to soften the blow. In one crucial victory, corporate lobbyists pushed the Securities and Exchange Commission and the Commodity Futures Trading Commission to exempt wide swaths of trading at energy companies, hedge funds and regional banks from regulatory scrutiny.

The industry at times is even taking its case to court. The financial industry has filed five lawsuits over rules stemming from Dodd-Frank, including a proposal to curb speculative commodities trading and another rule that would empower shareholders to oust company directors.

A version of this article appeared in print on 12/12/2012, on page F12 of the NewYork edition with the headline: Deconstructing Dodd-Frank.