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Banking

Fed Gov. Tarullo Describes Goals of Dodd-Frank Implementation

Fed Gov. TarulloThe Federal Reserve Board has made considerable progress in implementing the Dodd-Frank Act but much remains to be done, Fed Governor Daniel K. Tarullo told the Senate Committee on Banking, Housing, and Urban Affairs in testimony on December 6.

The Federal Reserve has issued 29 final rules, public notices, and reports and has another 13 rules in the works, Tarullo said in summarizing the Fed's implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Ultimately, the Federal Reserve will issue about 60 sets of rules and formal guidelines related to Dodd-Frank, Tarullo said.

The responsibilities for implementing the Dodd-Frank act span several federal agencies. Thus, much of the work, Tarullo said, involves time-consuming joint rule-making proceedings and coordination among agencies. Despite the "variation and complexity in our Dodd-Frank implementation responsibilities, we have several unifying goals," he said of the Fed and other federal financial regulatory agencies.

Among those goals:

  • Get it right. The Fed and other agencies, Tarullo remarked, are striving to implement the Dodd-Frank act "faithfully, in a manner that maximizes financial stability and other social benefits at the least cost to credit availability and economic growth."
  • Solicit and consider other views. The Federal Reserve is consulting with other regulators in order to improve the consistency of regulation across the financial industry and limit overlapping requirements. "We are also trying to make our rule-making process as fair and transparent as possible, with ample opportunity for the public to comment," Tarullo said. He testified that public input helps to identify and resolve issues raised by regulatory proposals.
  • As much as possible, minimize the regulatory burden on small banks. To this end, the Federal Reserve has established community bank councils at each of the 12 regional Reserve Banks, including the Atlanta Fed. These councils gather input from community bankers on ways to limit small institutions' regulatory burdens and improve the efficiency of the Fed's supervision of those institutions.
  • Finally, complete Dodd-Frank projects as soon as possible while meeting the three objectives listed above. "There is obviously considerable value in providing as much clarity as possible as soon as possible to financial markets and the public about the postcrisis financial regulatory landscape," Tarullo said.

December 23, 2011