“2013 was a not-awful year for financial reform. If you aren’t terrified of jinxing even the smallest good news, you might even say it was pretty good. The multi-year implementation of 2010’s Dodd-Frank bill made several final advancements this year, and compared to where people thought we’d be a year ago, we are in a pretty solid place.
“Last year, nobody thought that banks would face tougher holding requirements for capital, that regulations of the financial derivatives markets would advance, or that the final Volcker would be a pretty good start instead of an incoherent mess. Yet that is what appears to have happened in 2013. So what caused it? And how it might apply to future political goals?
“The successes of 2013 were partially driven by the failures of Wall Street in 2012. The multi-billion dollar trading losses from JPMorgan Chase known as the “London Whale” changed the dynamics for financial reform in a way that took a year to realize. JPMorgan had been leading the charge against reform, arguing that the effort was over-harsh and destructive, and that Wall Street had already cleaned up its act on its own. Indeed, the big concern in 2012 was that Wall Street would convince enough moderate Democrats that Dodd-Frank had gone too far in certain respects, and that Congress would stop regulatory action before it was even completed. This fell apart right alongside the multi-billion dollar losses in JPMorgan’s position. Though various bills to remove parts of Dodd-Frank would pass the House by Republican votes, these efforts failed to generate moderate Democratic votes in the Senate after the Whale trade became public.”
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