June 25 (Bloomberg) -- Legislation to overhaul financial regulation will help curb risk-taking and boost capital buffers. What it won’t do is fundamentally reshape Wall Street’s biggest banks or prevent another crisis, analysts said.
The ink is not yet dry and there's no vote yet on exactly what this bill actually is and does. I'll be doing my usual analysis once I have an actual stable copy.
But what I can tell from watching CSPAN until the wee hours, and following the process as closely as I reasonably can without crawling up Barney Frank's skirt, this is what we got:
Much of the bill also won't do anything immediately, as it "enables" rather than directs in and of itself. That's very bad, as the regulatory capture process remains intact. What actual regulations will come out of this remain an open question.
On balance: Better than no bill, and Judd Gregg claiming that the bill is a "disaster" and will "dramatically contract credit" is just pure garbage. What it will do is stop a small amount of unsupportable and unsustainable lending, but nowhere near enough of it. It will not stop excessive risk-taking and risk-layering. The capital requirements aren't stringent enough, the "Volcker Rule" was watered down to the point of being of little effect and the derivatives regulation was eviscerated.
Oh, and nowhere that I can find - thus far - is there an "or else" for either a bank or a regulation for violations of the law.
On balance, thus far, I call it this:
All bun to (try to) soothe the masses and electoral anger, no beef.
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