As we noted at the start of the Senate debate on financial regulatory reform, the Chamber listed 5 areas of the financial regulatory reform bill that needed to be fixed for a bill to be effective. With the Dodd-Frank Bill passing 60-39 earlier this afternoon, where do the big 5 stand and what does the future hold?

1. Consumer Protection: The Chamber was concerned about a new agency with unchecked powers that can regulate Main Street businesses. A critical win was spearheaded by Senator Snowe exempting small businesses from the jurisdiction of the new regulator. An important change, but the concerns remain.
2. Derivatives: The Chamber supported more clearing with allowance for flexibility for corporate end-users to use derivatives to bring low-cost products to market for consumers. The result, so much confusion surrounding corporate end-users that Rep. Barney Frank has already promised a second bill to try and come up with a workable system.
3. Ending “Too Big to Fail”: The $150 billion pre-paid was removed and the impact upon non-financial companies was significantly narrowed. However, the new Financial Information Office is a half a billion dollar agency with broad subpoena powers. Stay tuned.
4. Corporate Governance: Many of the measures pass, but with potential exemptions for small businesses and some degree of flexibility. However, these provisions look like Sarbanes-Oxley on steroids.
5. Volcker Rule: Dodd-Frank imposes a tough version of the Volcker Rule. The silver lining—it may take 10 years to implement.

What does the future hold?

Senator Dodd: "No one will know until this is actually in place how it works."

Representative Frank: Promised a second bill to correct flaws before Dodd-Frank even passed.

Next steps: by our own analysis 520 rulemakings, 81 studies and 93 reports*. By contrast Sarbanes-Oxley had 16 new rule makings and 6 studies.

In short, the intent of the bill was to create a 21st century regulatory system, eliminate uncertainty and allow credit to flow so businesses can expand and create jobs. The end result: no real reform just much more of the same, increased uncertainty, and businesses hunkering down because there are no clear rules of the road. Hardly a recipe for success.

If anyone tells you financial regulatory reform is over, tell them as we say in New York—fuhgetaboutit!  There is round 2 to come – the regulations; then round 3 – fixing the clear mistakes; then round 4 – addressing the unintended consequences; and then round 5, fingers crossed, the realization in the future that we need a complete overhaul of the system. Nothing ended today, in fact the fight for financial regulatory reform has barely begun.

*Updated 21 July 2010 from 533-60-94.