If Aesop were still in the fable-writing business, and he had been watching the last three years of Dodd-Frank Act rulemaking, we would probably be reading the Snail and the Tortoise to our kids. In this issue of Dodd-Frank at Three, we are, once again, inclined to direct your attention to the tortoise. At each milestone since enactment of the Act, we have noted that slow and steady implementation progress was being made by the banking agencies, the SEC and the CFTC, and we were beginning to see a new regulatory framework for financial institutions take shape. On this third anniversary though, slow and steady seems to have given way to even slower and increasingly uncertain.

As we start the fourth year of our Dodd-Frank vigil, it is apparent that the U.S. Congress is looking to re-enter the race. On the one hand, various bills are pending that would purport to correct or clarify provisions of the Act, or to scale back provisions of the Act or at least those provisions that would harm community and smaller banks as well as end-users. At the same time, questions are being raised regarding whether the regulatory framework is adequate—has too-big-to-fail been addressed adequately by the Act? Is too-big-to-fail even the most pressing concern? Should Basel III be abandoned in favor of simpler, but blunter, regulatory capital requirements? And, to what extent is it appropriate to impose U.S. requirements on foreign entities? The list of issues being revisited in thought, if not deed, is long. It is inevitable that with the Dodd-Frank Act having come together so quickly on the heels of such a profound financial crisis, the passage of time will engender second thought. However, after three years of regulatory change, and with many of the most critical issues still remaining unresolved, slow and steady looks like a snail’s pace.  We can only hope that this pace leads to more thoughtful approaches to the issues raised by the financial crisis. Time will tell whether the regulators are charting a better course or only delaying the inevitable.

To review our full memo summarizing the status of the Dodd-Frank Act on its third anniversary, please see here.