One year after passing Dodd Frank Financial reform, much of the work of reforming America’s financial system still lies ahead. This is not too surprising considering the sheer size of the legislation. The law created 243 rules and requires agencies to produce 67 studies, according to Harvard Law School Forum on Corporate Governance and Financial Regulation. One-hundred-twenty-two deadlines are due between July 16 and July 21.
The law also requires agencies to make new data from disclosures filed by financial firms public, but to do so agencies must overcome obstacles such as lack of funding and limited bureaucratic capacity. The law mandated few concrete deadlines to keep these efforts on track. A Sunlight review of government efforts so far reveals that most databases seem half completed or have not been started yet. For example, Congress mandated a foreclosure database but has still not funded the project. Over the past year, the nascent Consumer Financial Protection Bureau (CFPB) was in the process of setting up the organization tasked with making the foreclosure data available. The success of creating a National Appraisal Registry is undermined by the lack of public access to all the information.
The Dodd Frank financial reform created four public databases as part of an attempt to increase oversight and prevent another financial meltdown. These datasets were to track foreclosures, consumer complaints, financial institutions and a national appraisal registry.
- The Department of Housing and Urban Development (HUD) was tasked with establishing a publicly available database of information on foreclosures and defaults on mortgage loans.
- The Bureau of Consumer Financial Information must establish a consumer complaints database.
- The Financial Stability Oversight Council is required to publish a financial company reference database, a financial instrument reference database, and formats and standards for data.
- The bill also created a National Appraisal Registry.
Implementation on all these datasets is progressing at a snails pace.
The Department of Housing and Urban Development was tasked with establishing a publicly available database of information on foreclosures and defaults on mortgage loans. While Congress set high goals for HUD to track foreclosures, there was little follow through to fund these mandates, according to a HUD spokesperson.
According to Brian Sullivan in HUD's office of public affairs, "The main obstacles to complete the foreclosure database are the lack of appropriations to create the database and the lack of statutory authority to compel the reporting to HUD of information necessary to compile localized loan performance data. So far, Congress has not funded the foreclosure database. HUD requested funding for the database as part of its 2012 proposed budget." He continued, "HUD currently monitors home loan performance by using private sector data sources like the Mortgage Bankers Association, CoreLogic, and Lender Processing Services (LPS/McDash) data.”
Consumer Complaint Database
The newly formed agency under Dodd Frank, the CFPB, has yet to make comments on the Consumer Complaint Database available to the public. There is currently a web resource that helps consumers find out where to resolve their complaints. The CFPB gets its funding independently, so it is not up against the same budgetary restrictions as HUD. The CFPB’s largest hurdle to fulfilling its duties at this point may be appointing a director. Elizabeth Warren is setting up the CFPB but no director has been confirmed. Even without a director, the CFPB will be able to open its doors, but it will only be able to enforce existing laws and not be able to form new regulations.
The Securities and Exchange Commission (SEC) currently provides access to some filings on its EDGAR database. Dodd-Frank has a requirement that the SEC create a Data Center that provides the public “financial instrument reference database.” The SEC, to fulfill that requirement, must “prepare and publish, in a manner that is easily accessible to the public (i) a financial company reference database; (ii) a financial instrument reference database; and (iii) formats and standards for Office data, including standards for reporting financial transaction and position data to the Office.”
National Appraisal Registry
The National Appraisal Registry gives grants to State appraisers to help ensure that appraisal data is collected. The data is not universally accessible. The public can make general queries but the website states, “In general, unless you are an ASC-authorized State appraiser regulatory agency official, you will not be able to access information regarding National Registry Numbers and disciplinary actions other than revocations, suspensions, and voluntary surrenders in lieu of disciplinary action. The National Registry reports as public information active disciplinary actions that limit an appraiser’s ability to appraise (current revocations, suspensions, and voluntary surrenders in lieu of discipline).” This seem to fulfill the requirement of bill. The ASC, or Appraisal Subcommittee, is part of the Federal Financial Institutions Examination Council (FFIEC), which was established in 1979 to develop "uniform principles, standards, and report forms for the federal examination of financial institutions by the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS)." In 1980, Congress gave the FFIEC the task of making public information required under the Home Mortgage Disclosure Act, including data that allows researchers to examine lenders' mortgage offerings to poor and minority borrowers.
REPORTS and RULES trackers
There are a few tools to track Dodd Frank reports and regulations. The St. Louis Federal Reserve Bank has made a comprehensive tracker of Dodd Frank reforms. It outlines updates, rules and resources. The American Banker’s Association also created a simpler Dodd Frank calendar outlining programs, decisions and reports. The law firm, Davis Polk provides a monthly evaluation of Dodd Frank Deadlines.
The Securities and Exchange Commission provides a Dodd Frank implementation timeline. It lists provisions of the bill and when the SEC expects to implement them. Upcoming rules include, standardization of the credit rating process, limitation of proprietary trading and elimination of some conflicts of interest within hedge funds. The SEC will also deliver a report on the deficiencies of its Inspector General.
The Commodity Futures Trading Commission (CFTC) lists reports and studies it produces in compliance with the Dodd Frank Act. Reports include Abusive Swaps and the impact of the CFTC’s FOIA exemption. The CFTC also has a list of proposed and final rules. Two of the rules up for comment will define “swaps” and “swap dealers” and decide the Capital Requirements for Swap Dealers. Credit default swaps were seen by many as a root cause of the current depression.
The Federal Insurance Deposit Insurance Corporation (FDIC) maintains a website of initiatives under the Dodd-Frank. An upcoming rule that has gotten much attention is the Credit Risk Retention or "Skin in the game" rule that requires banks to keep a fraction of the loans they originate. Regulators hope such a rule could dissuade lenders from making loans that are doomed to fail. Members of Congress and various real estate, construction and financial institutions are fighting for a less restrictive standard.
The Financial Stability Oversight Council (FSOC) created a report of how it plans on implementing Dodd Frank. The FSOC will soon be making its first report to Congress. A list of FSOC initiatives are available on the Treasury website. This includes the minutes from FSOC meetings.
The acting Comptroller of the Currency, John Walsh, gave testimony on the Office of the Comptroller of the Currency (OCC) plans to implement the Dodd Frank restructuring. The OCC also released a description of the transfer of responsibilities as outlined in Dodd Frank.
The Consumer Financial Protection Bureau outlines its implementation timetable on its website making note of the milestones it reaches. The CFPB has not yet made any regulations. It cannot legally begin that until July 21. It officially announced that in regards to Small Business Data Collection outlined in Dodd Frank it is “Waiting to commence information collection until implementing regulations are in place.”
The Federal Reserve provides a list of completed and planed initiatives. In May, the Federal Reserve ruled for greater disclosure of fees and exchange rates in remittance transfers. It also has a central location for Dodd Frank Act Proposals.