The Dodd-Frank financial reform bill can't find much love these days. Three years after it was signed into law—and with only about 20 percent of its rules in place—critics and even supporters of the regulation say they find it flawed and convoluted.
"It had some good ideas when it first passed but it's pretty much a failure," said Kurt Schacht, managing director of standards and finance market integrity at CFA Institute, an association of investment professionals.
"It's confusing, to say the least, and the rules keep changing," Schacht said. "The financial industry keeps pushing back on the rules and trying to get them changed. It's a mess."
Helping to make Schacht's point was action last month in the Financial Services Committee in the House of Representatives.
The committee voted to alter a rule in Dodd-Frank that in essence prohibited the government from bailing out federally insured banks that engaged in swaps trading—customized trading of contracts between two parties in over-the-counter trading. Certain banks could get government bailout funds for such activity. (Clarification: This bill and other possible changes to Dodd-Frank have yet to be voted on by Congress.)
(Update: As it stands now, there is a clear prohibition in Dodd-Frank on bailouts for banks for losses do to swaps activity. Currently, there is no pending legislation in Congress to change that status, according to the office of Congressman Jim Hines (D-CT.)
"The swaps are complicated for Congress and anyone to really understand and these lobbyists come in and pretty much tell the politicians what to do," said Dennis McCuistion, a professor of governance issues at the University of Texas, Dallas.
"I'm a free-market guy, but we live in an era of crony capitalism," McCuistion said. "The financial industry lobbyists set up a system where they win and if they lose, the taxpayers have to pay."
Created out of the financial crisis of 2007-2009, Dodd-Frank was supposed to answer calls for reforms on Wall Street to prevent another crisis from happening. The law was initially proposed by the Obama administration in June 2009.