What happens when one agency tells your company to go left and another agency tells you to go right? 

First, you waste your time assuming they will get on the same page. Second, when that inevitably fails, you try your best to do both. 

Time and time again, the federal agencies responsible for writing the nearly 450 rules of Dodd-Frank can’t agree on consistent standards, or even on a timeline for finalizing those standards. Differing priorities, turf wars, and culture clashes make for confusing and conflicting regulations that make compliance a nightmare for companies. 

Take, for example, the treatment of foreign exchange (forex) transactions under the new Dodd-Frank derivatives regulations. 

In April 2011, the Treasury Department proposed to exempt forex transactions from the definition of a “swap.” But in July 2012, the CFTC finalized a regulation that defines a forex transaction as a “swap.”

Why the Treasury has taken 18 months—and counting—to finalize its determination is anybody’s guess. Equally bizarre is the CFTC’s decision to finish its swap definition before a final determination by Treasury.  All the CFTC and Treasury had to do was coordinate their timetables and there would be no issue. 

Instead, we have a glaring disconnect that forced the CFTC to issue a complicated statement on Friday, the day its rule went into effect, explaining how something can be both a swap and a non-swap at the same time. 

It’s a neat trick: Swap today, based on the CFTC rule; probably not a swap tomorrow, depending on when and how Treasury finalizes its exemption.  Companies will be forced to prepare to register as swap dealers because they transact in forex, only to find weeks or months later that they no longer need to count their forex transactions because they have been exempted by Treasury. 

This blunder may not put anybody out of business, but it is a costly, wasteful, and completely avoidable fumble, and just one small example of how our regulatory system is broken.