Fighting Dodd-Frank: Is Smart Politics, Smart Business?
By: Michael “Mack” Frankfurter
Notwithstanding the outcome of the election, it may have been smart politics to fight Dodd-Frank, but is it smart business going forward? Throughout the primary and general election season, Republicans repeatedly invoked the law’s 848-page girth—and its rules on, among other things, trading derivatives—as a symbol of government overreach that is killing jobs.
As noted by Michael Greenberger, professor at the University of Maryland’s Francis King Carey School of Law, tactics used to try and stop Dodd-Frank include attempts at blocking its passage, starving regulators financially so the law cannot be enforced, and most recently, challenging the final rules with a flood of lawsuits in federal courts claiming that regulators have used improper cost-benefit analyses.
There seems to be two major themes underlying Wall Street’s resistance. The first is the cost Dodd-Frank will impose on certain institutions’ existing business models, exposing these firms to either more competition, or rendering certain lucrative ways of doing business no longer viable. The second is the cost of implementing and/or upgrading technology to properly support the deluge of new requirements, some which contemplate the building of infrastructure that currently does not exist.
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