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By Henry Kaufman
Published: December 16 2010 22:03 | Last updated: December 16 2010 22:03
The Dodd-Frank act aimed to reform US financial markets, but is now contributing to uncertainties over growth, while posing a serious long-term challenge to competitive finance and the independence of financial institutions. At about 2,400 pages it is hardly a paragon of brevity. Even so, a surprising number of its requirements are still being hammered out by the new official regulatory bodies it created.
Agencies are racing to a July 2011 deadline to set many of the act's regulations. Confusingly, however, some will be phased in more gradually: more than six years may elapse before the restrictions on proprietary trading are fully in place, for instance. The law also creates a worrying overlap between regulatory bodies. The Federal Reserve has overall authority, but doubts remain whether it can co-ordinate regulators with sufficient market and monetary policy expertise. The Fed's position has also been weakened by recent criticism of its moves on quantitative easing, and by likely tougher oversight by the new Republican Congress. In short, the implementation of this act is very precarious.
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