My colleague, Monthly editor Haley Sweetland Edwards, set to work a couple months ago on a big, tough story. The assignment was to take something awfully boring and complicated, yet extremely important—the rule-writing process—and make it not just comprehensible, but interesting.
I’m here to tell you she absolutely knocked it out of the park, and I am frankly gobsmacked at the grade of this achievement. (Journalists will know there are few things harder to make interesting than legal, bureaucratic machinations. There are few villains and fewer heroes, and the controversies typically center around arcane technical minutiae.)
The piece focuses mainly on Dodd-Frank and how corporate lobbyists have ground the gears of the regulatory apparatus nearly to a halt. Here’s a small sample—how lobbyists used two meaningless words (“as appropriate”) to blow up two years of careful rule-making at the Commodity Futures Trading Commission:
Two months later, two powerful industry groups, who together represent the biggest speculators in the world, hired Eugene Scalia, the son of Supreme Court Justice Antonin Scalia, as their lead counsel, and launched a lawsuit against the CFTC. The Securities Industry and Financial Markets Association and the International Swaps and Derivatives Association were suing on the same grounds that the exchange executives’ lawyer had cited in that meeting with Chilton a year earlier: the CFTC had not demonstrated that establishing position limits was necessary and appropriate, they claimed. They also argued that the commission had not sufficiently studied the economic impact of the rule.
House Democrats and nineteen senators, some of whom had drafted Dodd-Frank, petitioned the court to rule in favor of the CFTC, a handful of op-eds beseeched judges to do the right thing, and financial reform advocates called foul.
None of it made a difference. In September 2012, the U.S. Court for the District of Columbia Circuit overturned the CFTC’s rule. In the decision, the court wrote that the commission lacked a “clear and unambiguous mandate” to set position limits without first demonstrating that they were necessary and appropriate. And with that, more than two years after the passage of Dodd-Frank, there were still no federally administered position limits for any commodities except grain, and the CFTC was back to square one. The muckety-mucks at the exchanges rejoiced, as appropriate.
She also emphasizes something that is often lost in progressive narratives about “how Wall Street killed financial reform”: that there are many rules yet to be finalized, and some could have real impact:
As of now, roughly two-thirds of the 400-odd rules expected to come from Dodd-Frank have yet to be finalized. That includes big, potentially game-changing rules governing inappropriate risk taking and international subsidiaries of American banks, and how exactly we’ll go about regulating derivatives. In the next year or so, the vast majority of these rules will be launched down the rule-making gauntlet. The necessary first step in assuring that they come out the other end as strong as they should be—or that they come out the other end at all—is to understand the challenges they’ll face along the way.
These are only tiny portions of a long story, but it wears its length well, neither tedious nor burdened with unnecessary detail. If you do nothing else today, take a few minutes and read this piece. You won’t regret it.
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