JPMorgan Chase & Co. (JPM), Bank of America Corp (BAC): Blame Regulators, Not Congress, for Dodd-Frank Frustrations

Make no mistake: The U.S. needs financial reform. But with a rulebook approaching 10,000 pages and growing daily, it’s wholly unreasonable to expect banks to keep following those rules.

With typical bravado, JPMorgan Chase & Co. (NYSE:JPM) CEO Jamie Dimon told BusinessWeek in early 2012 that, “If you want to be trading, you have to have a lawyer and a psychiatrist sitting next to you determining what was your intent every time you did something.”

For the regulators, it may be too late. Looking back to the savings and loan crisis of the late 1980s, Congress initially passed the Financial Institutions Reform, Recovery and Enforcement Act in 1989. After only two years, legislators deemed the initial bill insufficient and passed the FDIC Improvement Act. Don’t be surprised if financial reform is once again being debated on Capitol Hill in 2014, this time with an eye toward overhauling the regulatory agencies that failed to implement Dodd-Frank.

A lesson for regulators
Our financial system’s problems need to be addressed, but the regulators have mangled the legislation into an overly complex, convoluted, and ineffective apparatus.

And yet, despite Dodd-Frank’s slow progress, there is hope. Basel III is moving along as planned, and history has many examples of effective regulations. Glass-Steagall, a very pertinent example, worked pretty well for 60-plus years. The common theme for both successful efforts? Simplicity and clear expectations.

The article Blame Regulators, Not Congress, for Dodd-Frank Frustrations originally appeared on Fool.com.

Fool contributor Jay Jenkins has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.

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