Financial Reforms – How A Rule Is Made

START OF THE JOURNEY

Rulemaking is the process by which federal agencies implement laws passed by Congress and signed into law by the President. Since these statutes are broadly drafted to establish basic principles and objectives, agencies must further refine this legislation to ensure that the intent of Congress is carried out in specific circumstances. This is the rulemaking process.

The Dodd-Frank Wall Street Reform Protection and Wall Street Reform Act of 2010 was signed by President Barack Obama on July 21, 2010. While rulemaking is already underway, there is a long road ahead. It is estimated that close to 250 rules will need to be written and approved, with 11 regulatory agencies involved at various points in the process.

Here is a brief overview of the journey of a rule from start to finish:

FIRST STOP (Optional) | Request for Information

The rulemaking process usually begins with a rule proposal, but sometimes an issue is so unique or complicated that the agency seeks public input on which, if any, regulatory approach is appropriate. A concept release is then published, which often seek the views of the public in deciding the best approach.

SECOND STOP | Open for Comment

The regulatory agency publishes a detailed formal rule proposal for public comment in the Federal Register. Defined objectives and requirements to implement the law are defined. The public is encouraged to submit its comments during this period, which is usually between 30 and 60 days after the posting of the rule. The ability to gather comments from the public during this period is considered a vital part of effective rulemaking.

THIRD STOP | Proposed

Once the open-for-comment period ends, the rule moves into proposed rule status until it is acted upon during the fourth leg of the journey.

FOURTH AND FINAL STOP | Final Rule

Incorporating the input of comments from the public, the regulatory agency then publishes the final rule in the Federal Register. It becomes applicable to those covered by the rule on the dates specified.

See also http://www.stlouisfed.org/regreformrules/ for more details and latest on the Dodd-Frank Act financial reform rules.