The Washington PostDemocracy Dies in Darkness

Dodd-Frank is 3. So why isn’t it ready yet?

If that were your report card, you'd fail. (Davis Polk)

Davis Polk, a law firm that tracks rulemaking mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, is out with its latest progress report, and the results sound pretty dismal. About 70 percent of the 398 deadlines have passed, and out of those, 62.7 percent have been missed. So as the law's third anniversary approaches, less than half of it has been actually implemented. Should you be outraged?

Well, the numbers are a little misleading. In its rush to fix the market mess in 2010, Congress imposed an extremely ambitious timeline for writing hundreds of rules, many of which were due within a year. A Government Accountability Office report from January said regulators had attributed the delay to "the number and complexity of the rulemakings required and the time spent coordinating with regulators and others," as well as "extensive industry involvement through comment letters and litigation resulting from rulemakings, concurrently starting up a new regulatory body and assuming oversight responsibilities, and resource constraints."

Under former chairwoman Mary Schapiro, the Securities and Exchange Commission paid the deadlines little heed, leaving it with the largest pile of rules outstanding. The Commodity Futures Trading Commission rushed through its share, but maybe too quickly; it's had to forgive some enforcement as market participants raised issues with how rules play out in practice. In many cases, the financial industry has pushed back and filed lawsuits, slowing progress even further (USA Today described the attack on rulemaking in a long story last month).

But now that deadlines appear to have little meaning, it's very hard for the financial industry to know when anything is happening, which creates a damaging sense of uncertainty. "The point is not that people are saying 'you guys are so slow, we wish you'd be faster,'" says an attorney who asked for anonymity to speak freely. "The point is that there's an overhang of uncertainty, and that sucks up a lot of resources."

One of the big things left to resolve, for example, is the question of cross-border swaps: Do the rules apply to non-U.S. entities? Some prefer a more expansive view, bringing all market actors into the new regime, while others--including some of those foreign-based actors--would rather the rules be more narrowly applied. Either way, the only ones benefiting from continued delay are the lawyers.