Today at 11:30 a.m. ET, at the Ronald Reagan Building in Washington, President Obama is scheduled to deliver remarks and sign into law the 2,315-page landmark rewrite of the financial regulatory and Wall Street reform.

Yet even before the bill is signed into law, administration and other officials are already bracing themselves for the years of work that they anticipate will be required for the federal government to fully implement the sweeping reforms.

As reported by TheHill.com, senior administration officials said the legislation provides a “frame” for the new regulatory landscape, but the full force of the rewrite hinges on how regulators interpret their new powers in the comings months and years.

Officials noted it will take time to start up organizations like the consumer financial protection bureau created by the legislation.

“While some things start sooner than later, we should expect that this is going to be done thoughtfully and carefully, and that it will take time,” said Diana Farrell, deputy national economic adviser.

Federal agencies are already preparing for a massive hiring increase.  Yesterday, S.E.C Chairman Mary Schapiro, during her Testimony Concerning Oversight of the U.S. Securities and Exchange Commission: Evaluating Present Reforms and Future Challenges, which she gave before the United States House of Representatives Committee on Financial Services Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises, stated that the Commission expects to hire approximately 800 new positions during the course of the implementation.

“The President’s proposed FY 2011 budget included a request for $24 million to begin implementation of the President’s financial reform proposal,” stated Chairman Schapiro.  “With the specific provisions of the legislation in place, we have been working to develop estimates of the resources that will be needed to achieve the full implementation of Congress’ regulatory reform mandate. While the dollar cost of full implementation will depend greatly on the effective date of new rules, the timing of hiring, and other factors, we currently estimate that the SEC will need to add approximately 800 new positions over time in order to carry out the new or expanded responsibilities given to the agency by the legislation.”

Last Thursday, July 15, after nearly two years of legislative wrangling, the Senate made financial and legislative history with the final passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”).  The Act covers nearly every aspect of financial regulation and is by far the most significant overhaul of the financial regulatory system since the passage of the securities laws following the Great Depression.

The Senate approved the Act by a vote of 60-39, with three Republicans from the Northeast joining with the Democrats in voting to advance the legislation. One Democrat, Senator Russ Feingold of Wisconsin, voted against the bill, saying it was still not strong enough to prevent future crises. And the seat held by Senator Robert C. Byrd, Democrat of West Virginia, who died last month, is vacant.  The House approved the bill earlier this month by a vote of 237 to 192, and there, too, only three Republicans voted in favor.

The bill will now be sent to President Obama, who is expected to sign it tomorrow at the Ronald Reagan Building and International Trade Center in Washington, D.C.

Although clearly a significant legislative victory for President Obama and the Democrats, given the scope and breadth of the Act and the fact that its implementation will require multiple agencies vested with broad discretion to engage in a vast amount of rulemaking, it will be years before the practical implications of the Act are fully understood.  Even Senator Dodd (D-Conn.), chairman of the Senate Banking Committee and the Act’s main author, acknowledged that Americans will probably not know for years – perhaps not until the next financial crisis strikes – if the response by Congress this year was sufficient, or falls short despite the best intentions.

“We won’t know the full results of what we have done until the very institutions we have created, the regulations we have suggested and provided for are actually tested,” Mr. Dodd said in a floor speech. “We can’t legislate wisdom or passion. We can’t legislate competency. All we can do is create the structures and hope that good people will be appointed who will attract other good people — people who will make careers and listen and see to it that never again do we go through what we have gone through.”

Mr. Dodd, however, said that Congress had done its utmost.

“The American public expects nothing less of us than to fashion proposals that will minimize great risks to them,” he said. “None of us lost a job or a home in the last two years. None of us has watched our retirement account evaporate overnight. None of us will worry about whether our children can get a higher education. That all happened to the people we represent across the country.”

Mr. Dodd continued:

“They are asking that we do our best. They don’t ask for perfection. They know we have not solved every problem and that we are not going to bring back their homes and their jobs; but they expect us to respond to the situation that brought us to the brink of financial disaster. This is our best effort to do so.”

As reported by TheHill.com, Sen. Scott Brown (R-Mass.) announced today that he will vote for Wall Street reform when it comes up for a final vote in the Senate, bringing the Democrats that much closer to securing the bill’s final passage.

“I appreciate the efforts to improve the bill, especially the removal of the $19 billion bank tax. As a result, it is a better bill than it was when this whole process started,” Brown said in a statement on Monday. “While it isn’t perfect, I expect to support the bill when it comes up for a vote.”

Continue reading →

In an interview with Bloomberg News, Michel Barnier, the 27-nation bloc’s Financial Services Commissioner, said that EU member states and the European Parliament are “in the final stretch” before voting to approve the new rules in September.

Thus, despite dire warnings last month about the fate of the European Union’s proposed hedge fund and private equity regulations, the EU appears to be (for the time being at least) much more confident that the controversial rules will be approved in September.

Barnier also pledged to toughen regulation on financial derivatives, including credit default swaps and naked short-selling.  When asked whether naked short selling would be banned outright, Barnier told Bloomberg:

“I never mentioned a ban, even though it’s an option on which we are working on.  We will consult, especially on naked short-selling. It’s an option that we are studying with seriousness.  I want transparency, control and standardization.”