New Orleans Someone having folks over to the White House for cokes and coffee with the President doesn’t seem like much of a visit to the woodshed, but, hey, I guess a fella has to do something to be heard and heeded by his appointees even if he is the boss and the President of the United States.
This coffee klatch with the Federal Reserve and a slew of regulators of our financial institutions and practices was about the fact that they have missed 40% of the deadlines for coming up with new rules under the Dodd-Frank banking reforms that seek to curb the pitfalls and practices of “too big to fail” banks that led to the Great Recession five years ago. Dodd-Frank was passed in 2010, but bank lobbyists have managed to manacle the feet of the slow stepping regulators so that many of the items have been diluted or delayed. The much ballyhooed Volcker Amendment that was designed to prevent some of the worst of the big banks derivative and securitization messes by stopping them essentially from trading on their own accounts and forcing that to be separate has seen no implementation. Treasury Secretary Jacob Lew is now promising action on that by the end of the year.
When even people like Louisiana’s arch conservative Senator David Vitter has reached across the aisles to Ohio Democrat Sherrod Brown to sponsor legislation requiring the big banks to increase their capital requirements, you have to know this is getting bad. On the other hand one of the act’s namesakes, Barney Frank, now retired in Massachusetts, said part of the delay might be funding problems in some of the agencies due to the sequester. You have to admire, Frank. He still doesn’t miss a chance to get a shot in at the folks across the aisle from him, even if this is one case where no excuses are acceptable.
Nonetheless, if there is one thing we must be able to agree on in the highly polarized state of our politics today, it should be that financial institutions need a stout rule book and perhaps some of the rules should be tattooed on the back of their hands, easily available while hitting computer keys or making phone calls to implement moron trades. The daily news is still full of multi-gazillion dollar settlements from banks for actions that would normally be seen as criminal conspiracies and there is no sign on any front that they have learned anything from any of this.
A meeting at the White House for these folks almost seems like a perk. Obama needs to start kicking some butt with these regulators and hold them to the fire until they finally get the job done, rather than waiting for more lobbyists to wine and dine them to slow justice down once again while we are still teetering way too close to the financial abyss.