Six years after President Barack Obama signed the Dodd-Frank Act, the massively expanded regime of federal regulation of the financial services industry isn’t working as promised, according to the Government Accountability Office (GAO).
“Dodd-Frank made a number of reforms but it didn’t ultimately end up clarifying the complex and fragmented U.S. regulatory structure,” GAO said in a recent blog post. “Responsibilities for overseeing the financial services industry are still spread out over multiple federal regulators, hundreds of state agencies, and many industry organizations.”
Dodd-Frank did little to change the “fragmented and overlapping” regulatory structure, leaving the same potential for “inconsistencies and inefficiencies,” GAO said. (RELATED: GOP Plots To Eviscerate Dodd Frank, EPA Regs In Brand New Plan)
The law created the Consumer Financial Protection Bureau (CFPB), which, along with four different bank or credit union regulators, split the responsibilities for overseeing banks. That arrangement “may result in inefficiencies, such as duplicate examinations of banks,” according to GAO.
But CFPB is fraught with its own problems, as The Daily Caller News Foundation has reported. GAO blasted the agency earlier this year for allowing a culture of racial and gender discrimination. One in four black, Asian or female employees said “they had been discriminated against at the CFPB.”
Three of the top four CFPB officials ran through the revolving door from the agency to lucrative posts representing firms CFPB regulates. (RELATED: Revolving Door Swings As Feds Take Posh Jobs At Big Banks)
The law also began regulating swaps — complex financial agreements — through the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). But two agencies regulating interconnected markets can “create inefficiencies,” GAO said.
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