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The draft rule is complex because financial services industry lobbyists have badgered regulators to write in loopholes, countered Dennis Kelleher, president and CEO of Better Markets, a public interest nonprofit focused on the financial services industry.
"I think the regulators did a pretty good job of proposing a rule that gets close to reflecting the intent of the law," Kelleher said. "But it definitely needs improvement. And frankly, it reflects the intensive lobbying campaign of the industry to try to gut it, and water it down, and create exceptions."
The intensity of Volcker rule lobbying was on display when a federal study on how to implement it generated some 8,000 public comments, according to an analysis by Duke University law professor Kimberly Krawiec. The vast majority of the comments — 93 percent — were from financial institutions and their representatives.
Visits to federal regulators have been similarly lopsided, Krawiec found. Between the time of the Dodd-Frank law's enactment and the Volcker rule draft regulation's release in October, financial industry representatives met with federal agencies 347 times, accounting for 93.3 percent of all such visits. Visits from public interest groups and their allies numbered only 30.
Public interest advocates said the Occupy Wall Street movement has changed the tone of public debate, but they acknowledged its limits. Federal officials writing regulations depend on Wall Street players for their expertise and even for data about the banks, say Capitol Hill aides who worked on the Dodd-Frank law. And writing federal regulations requires more detailed legal and policy expertise than the average Occupy demonstrator can offer.
"The forces arrayed on the sides of this battle are incredibly uneven, as they were also during the efforts to pass Dodd-Frank," said Lisa Donner, executive director of Americans For Financial Reform. But she added that the Dodd-Frank fight yielded key reforms, even against long odds: "The fight's not done."