As the Dodd-Frank financial reform bill marks its first anniversary, the pace of rulemakings to implement its provisions has accelerated significantly. The agencies are now translating the statute's broad policy decisions into specific requirements that will define how major parts of the financial services industry must be reconfigured.

On June 29, the Federal Reserve Board (Fed) issued a landmark rule that establishes the maximum interchange fee that banks that issue debit cards may charge merchants per transaction. Under the proposed rule, fees paid to the banks would have been reduced by more than $12 billion annually. The final rule increased the maximum permissible fee from the proposed level, but in excess of $6 billion annually still will be transferred to merchants. The Fed also defined how payment card networks must enable a non-captive network by which merchants may route debit card transactions so that vendors can benefit from price competition.

On July 21, the Consumer Financial Protection Bureau (CFPB) began operations and will send examiners to the largest banks to determine their compliance with consumer protection obligations. President Obama finally nominated the initial CFPB director, but Senate Republicans announced they will block his confirmation unless the law is amended to have the agency run by a five-person board. Without a confirmed director, the CFPB lacks legal authority to exercise many powers delegated by Dodd-Frank, including the power to issue rules for, and examine compliance by, the many types of nondepository institutes (e.g., payday lenders) that will be regulated at the federal level for the first time.

On July 20, the Office of the Comptroller of the Currency (OCC) issued a rule clarifying its position on when state consumer protection laws are pre-empted as applied to national banks and federal thrifts. The rule narrowed the situations in which the OCC will claim state laws conflict with federal statutes by deleting proposed language asserting that state laws are preempted if they “obstruct, impair, or condition” a national bank's authority. The OCC acted in response to an unusual action by its nominal parent, the Department of the Treasury, which joined state representatives who criticized the proposal as a blatant violation of Dodd-Frank. The precise effects of this amendment are still unclear, but it opens the way for broader state regulation and enforcement against national banks.

The Commodities Futures Trading Commission (CFTC) has granted itself an extension until Dec. 31 to issue the 50-plus rules it must promulgate under Dodd-Frank. The most important rules will regulate the trading of swaps and derivatives. The agency already has issued a rule defining what types of swaps must be cleared through exchanges. It recently proposed rules that would establish margin and capital requirements, position limits, and the criteria for reporting and transparency by the swap execution facilities on which these instruments will trade. The recent decision by the D.C. Circuit in Business Roundtable v. SEC, No.10-1305 (July 22, 2011), overturning a proxy rule because the SEC failed to conduct a proper cost-benefit analysis, may have spillover effects and may indicate that the CFTC's rules will face similarly intensive review.

Implementation of Dodd-Frank has been an expensive proposition. The General Accountability Office estimates that the 11 covered agencies will have spent $1.3 billion by Sept.30, 2012 to carry out its requirements. The largest outlays will be incurred by the CFPB, OCC and SEC. The largest outlays as a percentage of the agency's budget will be incurred by the Commodities Futures Trading Commission, which will spend more than 25% of its budget on drafting rules required by Dodd-Frank.