This week, I spoke to the manager of a relatively small hedge fund and I asked him about how the regulatory climate has affected his IT roadmap. He grinned and gave a slight shake of his head.
He told me that since his firm buys most of its IT from its prime broker and third-party vendors, it wasn't much of a concern for him. "You obviously have to be compliant with those regulations that have been finished and keep up on what has changed, but all that stuff on the horizon—I let our third parties worry about that,” he said.
This week, US Rep. Barney Frank, who makes up one-half of the Dodd–Frank Act, announced that he would not seek reelection in 2012. Chris Dodd, Frank's partner in regulatory reform and a former senator of Connecticut, is already retired. This means that by the end of 2012, for all intents and purposes, the creators of one of the most sweeping financial regulations in the history of the world will no longer be a part of the implementation and advocacy of the bill.
As my colleague Jake Thomases has already noted, "While the law certainly has plenty of admirers left in government, they may not feel the personal stake that Dodd and Frank did. They may be more willing to compromise, or to let the law disappear all together in exchange for concessions elsewhere." And bear in mind that one part of Dodd–Frank has already been overturned by the District of Columbia Court of Appeals.
Many techies from smaller hedge funds that I speak with seem very unconcerned with Dodd–Frank. In fact, a few were unaware of Form PF, which was shocking to me. They just don't believe that this is going to go through "as is,” so why prepare for something that will inevitably change?
The way I see it, Wall Street will allow for certain parts of the Dodd–Frank Act to go ahead unhindered as a way to show that it is making some concessions. But as we head into 2012, much of the most important parts of the bill will get pushed back into 2013, if they survive at all.
I used to be a member of the Boxing Writers Association of America, so please excuse me while I use a pugilistic analogy: While Wall Street looked like it was in deep trouble in the early rounds, it survived, it has dragged out this contest and now it looks poised for a late-round KO.
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