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Little to celebrate after one year of Dodd-Frank compliance

As birthday parties go, this one was forgettable. Awful, really. One year into compliance with the Dodd-Frank Wall Street Reform and Protection Act, few are in a mood to fete the guest of honor, that bloated, convoluted, amorphous bundle of regulations that gave many businesses 12 months of headaches and FUD.

That’s not to say nobody is celebrating. The milestone was marked last Thursday by the official opening of the Consumer Financial Protection Bureau (CFPB), one of the 11 bureaucracies charged with administering Dodd-Frank, and the first new federal agency created in more than 10 years. So there’s at least one building full of Dodd-Frank revelers. It’s unlikely that’s who Treasury Secretary Tim Geithner was talking about when he sold Dodd-Frank on the promise that it was “designed to lay a stronger foundation for innovation, economic growth and job creation.”

But a win is a win, I suppose.

As for the rest of us, how well has the massive Dodd-Frank Act, with its 243 new rules administered by 11 different federal agencies, worked in its first full year on the books?


  • Unemployment has risen to 9.2%; 22 million Americans can’t find work.
  • More than 44 million Americans are now on food stamps.
  • The so-called Misery Index, a measure of unemployment and inflation, is at a 30-year high.


  • The creation of new businesses in the United States is at a 17-year low.
  • The cost of compliance with Dodd-Frank will top $1.25B (including $329 million for the new CFPB) through 2012, according to a congressional report.
  • It will take regulated businesses an estimated 2,260,631 annual labor hours required to comply with the 10% of Dodd-Frank regs activated so far, according to The Heritage Foundation.

It’s been ugly, as critics have been quick to point out.

“Thanks to efforts like Dodd-Frank, the drivers of our economy are increasingly focused inward,” wrote Rep. Ed Royce (R-Calif.), a senior member of the House Financial Services Committee and part of last year’s Dodd-Frank Conference Committee. “Rather than looking to finance the next Google or Microsoft, businesses will be mired in complying with 2,300 pages of flawed rules and regulations.

“From the Consumer Financial Protection Bureau, with its half-billion dollar budget and virtually no accountability or oversight, to the new derivatives regulation, ‘compliance’ with ever-changing dictates will consume these firms,” writes Royce. “If the end result was a more stable financial system, this may be a cost worth bearing. Unfortunately, every indication points in the opposite direction; a fundamentally weaker financial system and a less vibrant economy. This is not an anniversary worth celebrating.”

Fellow Financial Services Committee member Rep. Sean Duffy of Wisconsin agrees. “Dodd-Frank was rammed through Congress on claims that by increasing government mandates and control over the private economy, we would see robust growth in our economy and greater economic security for our working families and small businesses,” Duffy says in an op-ed piece in The Washington Times. “One year later, with new business creation at a 17-year low and paralysis in the private sector, it’s clear that Dodd-Frank has woefully underdelivered.”

Duffy is among those offering new legislative efforts to roll back much of what Dodd-Frank has wrought. But with a stagnant economy, ongoing public suspicion of Wall Street, and partisan political battles continuing at a fever pitch, any quick action to make Dodd-Frank easier for the regulated parties seems unlikely.

And so we might be wise to celebrate a little at Dodd-Frank’s one-year anniversary. After all, 90% of its directives haven’t even hit yet. There’s a tsunami of regulations still stored up in the act’s endless pages, waiting to be unleashed. Uncountable hours and incalculable costs for compliance will spew forth in the coming years. So raise a glass and toast Dodd-Frank. This is as good as it gets. As bad as this year seemed, the worst may be yet to come.

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