Obama of­fi­cials striv­ing to wrap bank­ing rules

Kuwait Times - - BUSINESS -

US of­fi­cials are striv­ing to put fin­ish­ing touches on a slew of bank­ing rules be­fore Pres­i­dent Barack Obama leaves of­fice and hands reg­u­la­tory power to Don­ald Trump who has vowed to re­write the ex­ist­ing fi­nan­cial rule book. Pres­i­dent-elect Trump will take over on Jan. 20 and his fel­low Repub­li­cans will have con­trol of Con­gress and gov­ern­ment agen­cies, al­low­ing the new ad­min­is­tra­tion to block or roll back many of the last-minute changes.

But by com­plet­ing far-ad­vanced work on some bank­ing stan­dards in the next 10 weeks, Obama of­fi­cials would rais­ing the chances that some el­e­ments of the reg­u­la­tory frame­work will sur­vive. Some rules are meant to flesh out the Dodd Frank Act of 2010 de­signed to pre­vent the next global fi­nan­cial cri­sis. Trump cam­paigned on a pledge to scrap the law but now he says only some pro­vi­sions must go to lighten the reg­u­la­tory bur­den. The Fed­eral Re­serve is work­ing on rules to gov­ern mat­ters such as ex­ec­u­tive pay, mar­ket sta­bil­ity and what in­vest­ments Wall Street may hold.

Last month, Se­cu­ri­ties and Ex­change Com­mis­sion Chair Mary Jo White said her agency would “in the near term” fin­ish a rule on one thorny is­sue: how mu­tual funds man­age de­riv­a­tives.

The SEC and bank reg­u­la­tors have also for years strug­gled to fi­nal­ize a rule that would tie more banker pay to the long-term health of their firms rather than short-term per­for­mance of Wall Street firms. With only about 40 work­ing days un­til the han­dover, it is not clear which, if any, of those stan­dards will get across the fin­ish­ing line.

“Just look at the calendar,” said Tom Quaad­man of the Cham­ber of Com­merce. “These are in­tri­cate rules and there’s not much time.”

The ex­ec­u­tive pay rule ex­em­pli­fies the chal­lenge. Six fed­eral agen­cies have a say on the com­pen­sa­tion stan­dard meant as part of Dodd Frank and a fi­nal draft has not yet been of­fered, in­dus­try of­fi­cials told Reuters.

It would be nearly im­pos­si­ble to cir­cu­late a fi­nal rule and get the agen­cies to en­dorse it while still sat­is­fy­ing stan­dards for clearing such pa­per­work, sev­eral lob­by­ists who have op­posed the rule said. Bank­ing reg­u­la­tors de­clined to com­ment on when the com­pen­sa­tion rule might be com­pleted.

NO TIME TO CHAT

Sim­ple lo­gis­tics also pose a chal­lenge. New fed­eral rules come into force once they have been pub­lished in the Fed­eral Reg­is­ter and em­ploy­ees there typ­i­cally need sev­eral days to type­set a rule.

That means Obama of­fi­cials need to lodge pa­per­work with the Fed­eral Reg­is­ter at the be­gin­ning of the in­au­gu­ra­tion week at the lat­est. Some six­teen copy edi­tors are due to forego leave and be on hand in the com­ing weeks to process fi­nal rules ex­pected from dozens of agen­cies, said an of­fi­cial fa­mil­iar with the op­er­a­tion, but not au­tho­rized to speak to the me­dia.

“These days, peo­ple do not spend a lot of time hanging around the cof­fee maker,” he said.

Some freshly-minted rules also face the prospect of get­ting erased un­der a 1996 law known as the Con­gres­sional Re­view Act, which al­lows Con­gress to block a reg­u­la­tion within 60 work­ing days of be­ing drafted. One such rule al­lows stu­dents who were de­frauded by for-profit col­leges to seek loan for­give­ness. The Depart­ment of Ed­u­ca­tion fi­nal­ized it days be­fore the Nov. 8 elec­tion, mean­ing Repub­li­cans who have raised ob­jec­tions to it will have a chance to block it.

Pres­i­dent Ge­orge W Bush was the first to trig­ger the Re­view Act when he block la­bor reg­u­la­tions that his pre­de­ces­sor Bill Clin­ton had en­acted at the end of his term. — Reuters

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