WASHINGTON - Almost four years after America's financial near-collapse, regulators are empowered to police financial markets as never before. Yet some of the most important rules to curb Wall Street's bad behavior have yet to take effect -- and could be watered down.
The 2010 revamp of financial regulation -- the Dodd-Frank Act -- attempted to do what much of the legislation in the 1930s did: Reshape the landscape. Dodd-Frank empowered the Securities and Exchange Commission and the Commodity Futures Trading Commission to regulate hedge funds, oil traders, credit ratings agencies, money market funds and a host of other Wall Street players that had enjoyed relaxed regulation.
Just last week, the revelation of a $2 billion trading loss at JPMorgan Chase added to a clamor for tighter regulation of financial firms.
But only about 33 percent of the new rules to rein in Wall Street are in force, according to the Davis Polk law firm, which specializes in regulation and puts out a monthly report on Dodd-Frank. And financial firms are aggressively trying to slow down the rulemaking process and roll back some of the rules.
One measure of progress is the number of cases being brought by the regulators' enforcement divisions. The CFTC filed 99 enforcement actions in the fiscal year ending Sept. 30, 2011. That was the highest tally ever, and a 74 percent increase from the prior year.
Similarly, the SEC, during the same period, brought 735 enforcement actions, its highest number ever.
But even as enforcement steps up, some of the biggest triggers of the financial crisis remain only half-addressed.
Hoping to return to a semblance of the precrisis status quo, financial lobbyists are stridently opposing efforts by bank regulators to prevent big Wall Street players from investing their own money in the same markets where they also invest money on behalf of their clients.