"The majority of the provisions of the Dodd-Frank Act are to be implemented and enforced by regulators that have been given strong and enhanced enforcement powers. So, derivatives, for instance, will be regulated by the Commodity Futures Trading Commission (CFTC) and the Securities & Exchange Commission (SEC), both of which already have strong enforcement programs, both of which have activist chairman who pushed strong enforcement actions and both of which have received enhanced enforcement power and larger budgets to hire more personnel under the Dodd-Frank Act. So, I believe both the SEC and the CFTC will be very vigilant watchdogs in enforcing the provisions under their purview the hedge fund rules, the derivatives rules, the credit rating agency rules, the securitization rules."
Perlow contended that the new consumer financial protection bureau would also have strong enforcement powers. He said that banks with more than 10 billion dollars would be subject to the agency's examinations.
"There will be a staff of examiners whose job it is to go on the premises and examine the consumer protection safeguards in compliance with the law that banks have on their products and services that they provide to consumers," explained Perlow. "And, if they find anything that is in violation of the law, they'll bring an enforcement action against them."
Finally, according to Perlow, "the industry believes that this is an agency that will have a lot of teeth." Although, for Perlow, he said it will not "touch investment products mutual funds, hedge funds, brokerage accounts" so it would appear the agency will mean little to many of the clients Perlow represents.
Currently, a battle over who will run the consumer protection bureau is playing out. The most popular candidate for the position is Elizabeth Warren, who developed the idea for the bureau and she served as the chair of the Congressional Oversight Panel that was created to investigate and monitor how banks were handling the bailouts given to them under the Troubled Assets Relief Program (TARP). But, banks with the help of Timothy Geithner are working to create doubt that Warren is the right candidate for the position.
Perlow concluded:
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