Our digital and social media producer Rachel Rohr is back from a month-long trip cross-country, talking with young Americans.
On his first day back from vacation, President Barack Obama met with federal regulators at the White House.
The topic? The Dodd-Frank Wall Street Reform and Consumer Protection Act — most of which hasn’t even been written yet.
John Zumbrun of Bloomberg News joins Here & Now to explain.
JEREMY HOBSON, HOST:
From NPR and WBUR Boston, I'm Jeremy Hobson. It's HERE AND NOW.
Federal regulators need to speed up reforms of the financial industry. That was the message yesterday from President Obama who met with regulators at the White House. It has been almost three years since the Dodd-Frank financial reform bill was passed, and only about 40 percent of the reforms in that bill have actually been written. Joining us to discuss is Josh Zumbrun, Federal Reserve reporter for Bloomberg News. Josh, welcome.
JOSH ZUMBRUN: Thanks for having me.
HOBSON: So Dodd-Frank was passed in the wake of, as they always say, the greatest financial crisis since the Great Depression. There was an expectation that regulators would move quickly. Why aren't they?
ZUMBRUN: The regulators, I think it's fair to say, are trying to move quickly, but the regulations that they've been tasked with writing are so complex. It requires so much agreement from the different regulators that it's been very difficult for them to complete the rules on the sort of timeline that was originally envisioned.
HOBSON: But what are the biggest parts of the law that have yet to be written?
ZUMBRUN: Two especially big ones are - the one is the so-called Volcker Rule that would just limit - that would limit - if it ever goes into effect, it'll limit the kind of risky proprietary trading that banks are allowed to do with their own money. The other thing is the mortgage rules that, you know, mortgages were so much at the heart of this crisis, and the new mortgage rules that are called for in the legislation still haven't been finalized.
HOBSON: What would those rules do?
ZUMBRUN: They would kind of standardized what makes a plain vanilla mortgage. Anybody who's trying to get a mortgage the last couple of years has probably found that it's very difficult, that the standards are very tight right now, that, you know, maybe if you don't have stable income on your W-2 tax forms - maybe you have good income, but if it's not stable, that can make it a lot harder to get a mortgage. These have set forth the rules for these things and would have a lot of clarity and would make it easier - presumably to make it easier for people to get mortgages because the banks would know the rules to write them.
HOBSON: Now, Josh, you say that these rules are so complex that maybe the regulators can't agree on them and that's why it's taking so long. The other storyline that is out there is that Wall Street is pushing back against these rules in a big way, and that lobbying effort is what's keeping them from being written.
ZUMBRUN: It's definitely true that the banks have been trying very hard to influence the process. And that to some extent, any sort of delay is good for them because it raises the prospect of somebody can get in there and modify the rule in a good way. But for the most part, the regulators are making progress with all these rules. They think they'll complete the Volcker Rule this year. And I wouldn't be stunned if they actually do make that belated deadline.
HOBSON: Now, there is also some opposition in Congress. Not everybody wants these rules in the first place. Representative Jeb Hensarling, he's a Republican, the chairman of the House Financial Services Committee, said yesterday, quote, "Dodd-Frank is an incomprehensibly complex piece of legislation that is harmful to our floundering economy and in dire need of repeal." So what about the congressional opposition?
ZUMBRUN: There's congressional opposition on two fronts. One is that the Dodd-Frank Bill is just too complex and it goes too far. Another complaint that we've seen from Senators Sherrod Brown from Ohio and David Vitter from Louisiana is that the bill doesn't go far enough in kind of simplifying and restraining the very biggest of banks. So there's criticism of the bill from both sides; that it's going too far, that it doesn't go far enough in the most important areas.
HOBSON: And, Josh, before we let you go, we are coming up on, what, five years since Lehman Brothers collapsed. There going to be a lot of people asking the question of whether we're really prepared for another crisis, especially if we haven't even implemented the law that was passed after the last one.
ZUMBRUN: I wouldn't despair as much as that. You know, some of these rules are unwritten, but some really important progress has been made. The Fed has been really pushing banks pretty hard to build up safety buffers, to hold more capital and reserve in case there's an emergency. And so although Dodd-Frank isn't completely written, I don't think that would - should be interpreted to mean that no progress has been made.
HOBSON: Josh Zumbrun, Federal Reserve reporter for Bloomberg News. Thanks so much.
ZUMBRUN: Thanks for having me.
HOBSON: And up next, we will talk about the country's helium reserve. That's next, HERE AND NOW. Transcript provided by NPR, Copyright NPR.