The Dodd-Frank bank reform act has always worked perfectly as prism for determining partisan alignment. Conservatives see it as burdensome over-regulation that will unfairly constrict the banking industry and slow overall economic growth. Liberals see it as a hopelessly co-opted toothless compromise, gutted by special interests. The reaction to the law works as a perfect metaphor for the Obama administration's overall record -- take your pick: outrage or disappointment.
Well, we finally have some data that casts light on both narratives. On March 12, 2012, a provision of Dodd-Frank requiring hedge fund managers to register with the Securities and Exchange Commission and provide information about their trading activities came into effect. Three months later, Wulf Haal, a law professor at the University of St. Thomas in Minneapolis, sent a survey to 1,264 "private fund advisers" asking them questions about the costs associated with complying with the new regulations:
Guess what? The sky isn't falling...
The hedge fund industry appears to be only modestly affected by the Dodd-Frank reporting and disclosure requirements and is adapting well to the new regulatory environment ... The private fund industry seems to be adjusting well and the impact of the registration and disclosure rules appears to be much less intense than the industry initially anticipated.
But wait a minute -- maybe that means liberals are right. The rules aren't tough enough!
Or there's a third possibility, suggested by Bloomberg reporter Nick Summers: Most hedge fund managers were too deluged with new paperwork to respond to the survey in a timely fashion.
There might be some truth to that -- only 94 of the 1,264 hedge fund advisers initially contacted sent in their surveys.