Shutdown helps put the brakes on banking reforms

Treasury Secretary Jack Lew testifies during a Senate Finance Committee hearing on Capitol Hill.
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With a short-term bipartisan deal near completion between Congress and the White House, the end of the government shutdown may be near.

But being out of business for 14 days has already put progress on key financial regulation, which requires the signoff of nearly a dozen government agencies, on ice.

In July, Treasury Secretary Jack Lew announced a reinvigorated effort to speed up regulators' efforts to write a handful of important rules for financial institutions by the end of the year.

"Much of our remaining work will be completed in the next five months," Lew told the audience at CNBC's Delivering Alpha conference. "Let me repeat: by the end of this year, the core elements of the Dodd-Frank Act will be substantially in place."

Shutdown's unintended consequences

(Read more: Lew: Dodd-Frank helped save the banking system)

Among those core elements: Simplified mortgage rules, enhanced standards for banks and nonbanks, and wide-ranging regulation covering the derivatives market. "Swift completion" of the Volcker Rule, Lew said, was a particular priority.

Now, government officials say the completion of those rules will likely not happen until next year.

A senior Fed official said regulators were "quite optimistic" that the Volcker Rule would be finished by the end of the year—before the shutdown crippled the resources of several agencies coordinating the writing of the final rule.

The Commodities Futures Trade Commission, tasked with contributing to a final Volcker Rule as well as spearheading derivatives rules, has been operating with a "skeleton staff" during the two-week shutdown.

(Read more: How debt ceiling crisis will avoid total disaster)

An email to a CFTC spokesperson bounced back that read: "I am currently out of the office due to the government shutdown. During this time, I am unable to answer your email or call. I will answer your email when the government reopens."

The other agencies involved—the Federal Deposit Insurance Corp., the Federal Reserve, the Securities & Exchange Commission and the Treasury are all, for the most part, functioning as usual.

While the Treasury—acting as ringleader between the alphabet soup of agencies participating—is also open, it's safe to say it has higher priorities: On Thursday, the U.S. government will breach a $16.7 trillion debt ceiling and need to figure out how to pay the government's bills.

(Read more: Relax! Governmentwon't run out of money Thursday)

The SEC being open is good news for one group: Companies looking to go public. Underwriters say that they've been able to get feedback on IPO filings in due course for companies to proceed with investor roadshows and pricings, with one date marked out of the calendar: Oct. 17. According to Renaissance Capital, some six companies are currently meeting with investors in order to price this week or next.

The most closely watched deal in the pipeline at present is Twitter, which sources say could start trading as early as November, pending market conditions.

Should Washington's actions cause extreme volatility in the market, though, the Twitter deal—in addition to others—could be delayed.

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