Don’t say we didn’t warn ya, and so it begins:

The implementation of the sweeping financial overhaul got off to a rocky start on Tuesday, when a series of top regulators suggested Congress might have to make changes less than three weeks after President Barack Obama signed the bill into law. Regulators meeting at the Federal Deposit Insurance Corp. expressed concern about a provision restricting the use of private credit ratings. In particular, the requirement has forced agencies to put on hold efforts to craft new capital standards for thousands of banks, particularly smaller institutions, which will likely prolong uncertainty over the rules of the road for at least a year.

Let's take a moment to let that bit I bolded sink in. Back to the fun:

...As mandated by the Dodd-Frank Act, regulators on Tuesday started a process to remove the use of credit-rating firms as a way to gauge banks' capital levels. Regulators previously expected to be able to use certain credit ratings to help determine how much capital banks would need to hold as a cushion against losses. The Dodd-Frank Act essentially prohibits credit ratings from being used this way, forcing regulators to come up with other ways for banks to measure risk. One problem: Thousands of smaller U.S. banks don't have the expensive risk-measurement models that large banks use, so finding an alternative that can be used by a wide range of companies could prove difficult.

What? A massive dose of new regulation piled on top of massive amounts of existing regulation raises costs and hurts smaller Main Street banks the most? Mais non! C'est impossible!

...Banks of all sizes will likely see a period of confusion with regulatory expectations in flux. Banking regulators were "weeks away" from finalizing a long-running effort to set risk-based capital standards for smaller, less-complex banks, say people familiar with the matter. That effort is delayed indefinitely because officials had incorporated credit-rating use in the process. The result is a state of uncertainty, said Cristeena Naser, senior counsel at the American Bankers Association. "Banks are really going to be in a conundrum…There are so many things being thrown at them all at once," she said.

A confusing uncertain conundrum for lenders. Just what borrowers need to get the credit flowing.