As exhausted investors and concerned citizens return from their holiday breaks to begin their assessment of what 2012 holds for both the financial markets and the inside-the-Beltway political culture that is charged with overseeing these markets, there seems little about the New Year to be “happy” about.
2011 ended with nearly three-quarters of the deadlines contained in the massive Dodd-Frank reform package missed. Literally hundreds of required rules have yet to be passed. Although some rule proposals are floating around, waiting to be formally adopted, almost 40% of the required rules have not even been proposed in draft form for review and comment.
The SEC and the CFTC has struggled to keep pace with the schedule that was set for them by Dodd-Frank, as there budgets have remained subject to political horse-trading in Congress. Despite significant increases in their responsibility, Congress has effectively frozen their budgets, leaving them to attempt to execute significantly increased responsibilities at their pre-Dodd-Frank funding levels.
President Obama stepped into the partisan fray yesterday by naming Richard Cordray as the director of the controversial Consumer Financial Protection Bureau (CFPB) over the vocal opposition of Senate Republicans. Cowdray was the Administration’s second-choice for this appointment after Elizabeth Warren, the Harvard Law professor who laid the groundwork for the Bureau, was deemed too controversial to survive a Senate confirmation hearing.
By using his power to make recess appointments when the Senate is not in session, Obama is issuing a clear and direct challenge to those vocal Republicans who have questioned the broad powers of the CFPB. Cowdray’s appointment had been previously filibustered in the Senate last month.
With Cowdray in place, the Bureau will be able to begin implementing numerous new rules and regulations in order to complete the overhaul of how US financial markets and financial institutions are regulated after the Global Financial Crisis.
Although Obama made clear with this recess appointment that he refused to take “no” for an answer, House Republicans quickly voiced their displeasure with the President’s procedural end-run and vowed to introduce legislation to block the Cowdray appointment until a court can rule on whether Obama’s actions were unconstitutional.
At a time when the financial markets, and the real economy, need certainty and stability, the political classes in Washington are still arguing over fundamental questions about the causes and effects of the Global Financial Crisis.
What savers and investors need is the confidence to put their money to work in the most effective way possible. How voters will react to partisan grandstanding on these important issues will significantly influence the upcoming election results in November.
And rightly so.
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