The financial regulatory reform bill is 2,300 pages long, so it makes sense that there are about that many opinions on it. It would be hard to choose just one adjective to sum up the range of feelings about the bill, so it's fair to start by saying "it's complicated."
The optimists may be scarce, but they're out there. The New York Times editorial page calls the bill a victory for the Obama administration, and contends that the bill addresses "urgent needs" and offers several achievements. Resolution authority and derivatives regulation are just two of them. The bill also creates the consumer financial protection bureau -- "a milestone," according to the Times, because it will ward against predatory lending practices that were responsible for much of the crisis. Clive Crook at the Atlantic magazine says the bill is "better than nothing," because it creates the Financial Stability Oversight Council, an overseer of the entire system.
Cynics, former government leaders in particular, are less pleased with the legislation. William Isaac, the former chairman of the FDIC, told the WSJ that "this bill would not have prevented the last crisis and will not prevent the next one." Harvey Pitt, the former chairman of the SEC, agreed. "Most of the attempted reforms are poorly drafted, or contain loopholes so large that a fleet of trucks could get past the supposed barriers," he said.
Rochdale Securities analyst Dick Bove bemoans the lack of thoughtfulness within the bill. If legislators had asked truly simple and basic questions that could get to the root of the problem, he writes, the legislation would be much more cohesive. "Legislators should have looked at the broader macro trends that impacted this industry and not just micro issues," he wrote in an analyst note. "They did not do this and the bill they have written, though long and involved, does nothing to solve any of the broader issues that created the financial crisis."
PIMCO chief Bill Gross was also disappointed. For him, the lobbyists managed to extract too many concessions from lawmakers. "Wall Street still owns Washington," he said. "Better to have appointed [Former Federal Reserve Chairman Paul] Volcker 'Dictator-In-Chief' than to have let the lobbyists dilute what needed to be done."
Perhaps the most widespread sentiment is the feeling that the bill just doesn't address enough issues. Risk Magazine's Peter Madigan writes that bill prompts several crucial questions that will have to be answered, specifically within the realms of regulating OTC derivatives. The bill is vague when it comes to regulating those instruments and hundreds of new rules will have to crafted over the next several weeks and months. Hank Paulson, former Treasury secretary, gives the bill an "incomplete" because it doesn't mention Fannie or Freddie and uncertainty regarding "too big to fail."
Lawmakers may have breathed a sigh of relief that financial reform finally passed, but the real work, it appears, is just beginning.
Write to Julie Steinberg