The recent passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act marks the completion of an arduous legislative process. But it also marks the beginning of an entirely new (and equally arduous) undertaking: the post-enactment process of creating the rules and regulations necessary to give effect to the Dodd-Frank Act. Although Dodd-Frank articulates the general intent of Congress with respect to the reformed regulatory structure, important decisions about crafting the specific rules and regulations have been delegated to financial regulatory agencies such as the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the newly created Federal Bureau of Consumer Financial Protection. Dodd-Frank instructs or empowers regulatory agencies to propose and finalize well over 200 rules and regulations (nearly 100 at the SEC alone). Many of these rules and regulations will be crafted jointly across agencies.

In this paper, the first in a NERA series examining the impact of the new financial regulations, Industry Affiliate Dr. James Overdahl provides an overview of the rule-making process and warns of a potentially combative process among the regulators and various stakeholders as the new rules are drafted and opened to public comment. He also examines the potential for future court challenges to federal rules, and notes that the outcomes of recent court challenges of this nature have turned on the adequacy of the economic support considered by regulators when they adopted new rules. As a result, parties submitting comments should pay particular attention to the quality of their economic arguments.