Dodd-Frank Stands Technically Corrected and Small Banks Lose
by Derek Klobucher
“People got a bit lax,” Queen Elizabeth II said last week of the time leading up to the financial crisis. “Perhaps it was difficult to foresee.”
The U.K.’s monarch also lamented that her nation’s Financial Services Authority “didn’t have the teeth” to curb risky business through 2008. And dental enhancements for global banking regulators continue to be a favorite topic from Brussels to Washington, D.C.
Mario Draghi, president of the European Central Bank and The Financial Times’ recently-named Person of the Year for 2012, advocated broader authority for the European Union following a breakthrough arrangement on Thursday. Eurozone finance ministers hammered out a deal to make the ECB the region’s central banking overseer.
“The ‘single supervisory mechanism’ (SSM) is just the first, and easiest, step in a banking union plan designed to prevent a repeat of the financial contagion that dragged down banks and sovereigns in the debt crisis,” The Financial Times said. “The next phase — agreeing on a common resolution authority to oversee the orderly winding down of insolvent lenders — is likely to be even more fraught.”
Technical Difficulties
But slow progress is still progress, as supporters of the Dodd-Frank Wall Street Reform and Consumer Protection Act know all too well. November’s election made clear to Republican lawmakers that a repeal of Dodd-Frank isn’t going to happen, so they’re turning to “technical corrections” of the regulatory series meant to rein in financial-crisis-causing behavior of too-big-to-fail banks.