Barney Frank, the long-time Democratic Congressman from Massachusetts who retired earlier this year, recently addressed the need for greater regulation of the U.S. financial industry in a Financial Times column. In the wake of the 2010 The Dodd–Frank Wall Street Reform and Consumer Protection Act, Frank believes that regulators need more funding to carry out their duties. In addition, the regulation of derivatives must be overhauled, because the current situation, in which such regulation is overseen by two independent agencies (the Securities and Exchange Commission and the Commodity Futures Trading Commission) is confusing and inefficient.
In Frank’s view, President Obama’s re-election should encourage critics of regulation to admit to the need for further reform and work with the President. But there are two key obstacles to his hope. First, Republicans control the House of Representatives and can limit funding of both the SEC and CFTC. Second, the District of Columbia Circuit Court of Appeals, which hears many cases involving federal agencies, has ruled on several occasions that regulators have exercised discretion that exceeds their authority. In Frank’s view, this court is exhibiting judicial activism in such decisions by refusing to respect the authority and discretion that Congress granted regulatory agencies. Despite his concerns, Frank believes that financial reform, although slowed, will eventually take place.