Three Weeks Into Dodd-Frank and the Banks are Still Open

Following weeks of rancorous debate in Congress and a hurried reconciliation process, the President signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law on July 21 (PDF download). The President’s signature ushers in far-reaching changes to the nation’s financial system that, in many respects, will not be fully understood – in Washington as much as on Wall Street or Main Street – for many years.

Details of the law aside, its passage heralds a reversal of long-term deregulation and harkens a medium-term outlook characterized by more aggressive enforcement. The civil fraud case against Goldman Sachs, while controversial in its mid-July settlement, is just one example of how federal agencies have been emboldened by the changing winds in Washington. Just yesterday, on August 10, the FDIC announced the creation of the Office of Complex Financial Institutions (see the press release). The new office “will perform continuous review and oversight of bank holding companies with more than $100 billion in assets.” As for how it will go about fulfilling this mandate, little is known at this time.