United in Disdain for Dodd-Frank, Wall Street Is Split on the DetailsPosted by in Blog on October 9, 2011
While the biggest rivals on Wall Street share a common disdain for new constraints on financial risk-taking, they’re fighting over exactly how to tame the sprawling regulatory overhaul.
Major industry lobbyists like the Chamber of Commerce and the American Bankers Association are split on crucial rules stemming from the Dodd-Frank Act, including restrictions on lending and the $600 trillion derivatives market, two areas at the center of the financial crisis. As federal officials flesh out some 300 new regulations, top companies and trade groups are squabbling over the fine print, each cheerleading for policies that suit their own businesses.
“On almost every issue, competitors are fighting over the outcome of regulations,” said Mark D. Young, a former regulator who is now a lawyer at Skadden, Arps, Slate, Meagher & Flom.
Some level of discord is expected. The Dodd-Frank law, which spans some 2,300 pages, is as huge and disparate as the industry it polices.
But a few industry debates have grown hostile. Firms are taking aim at competitors, and regulators are stuck in the awkward position of picking winners and losers — all of which has delayed new rules.
The nation’s biggest banks, at odds with their smaller brethren, are pushing Mr. Gensler to soften proposed rules that would create broader competition in the derivatives industry, according to several people close to the agency who spoke on the condition of anonymity because the rules are not yet finished. The banks, including Morgan Stanley, worry that smaller players may not have the financial fortitude to take on potential risks, concerns echoed earlier this year by a European regulator.