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HIGHLIGHTS FROM MINDING THE GAPEditor’s Note: The following excerpts are from the weekly Minding the Gap blog, written by Eugene Grygo.10Does Wall Street Own Washington?(Jan. 24, 2014)Larry Doyle, an ex-mortgage-backed securities trader, says in his first book, “In Bed With Wall Street: The Conspiracy Crippling Our Global Economy,” that Wall Street owns Washington.... On other matters, Doyle says the following:• The revolving door between regulators and top firms is a door “that should be shut.”• The culture of Wall Street has changed ... from providing service to a zero-sum game that favors firms over investors.• Major firms almost have de facto immunity from prosecution in money laundering cases. ... “We’ve got criminal behavior behind this stuff and it’s ongoing.”• And this leads to his most controversial point: “We need to break up the banks for the health of our economy and nation.”Is the Volcker Rule Worth $4.3 Billion?(March 24, 2014)The Office of the Comptroller of the Currency estimates that the cost of the Volcker Rule for financial services firms will range from $413 million to $4.3 billion.... A further drill-down reveals that the OCC foresees compliance and reporting requirements ranging from $402 million to $541 million per institution for 2014. ... OCC officials also predict that the costs associated with estimated capital deductions via those fleeting hedge and private equity funds will range between $147 million and $165 million.“The vast majority of this impact will be borne by large banks with assets greater than $10 billion. ... However, we estimate that up to seven smaller banks ... will have a significant impact.” The identities of these Seven Unlucky Sisters will not be revealed.Despite SIFMA, T+2 in the U.S. Faces Obstacles (April 18, 2014)Securities industry trade group SIFMA is throwing its support behind shortening the settlement of securities transactions from trade date plus three days (T+3) to trade date plus two days (T+2).... Despite the best efforts of SIFMA and the DTCC, the move to T+2 in the U.S. may face some key stumbling blocks.The first is regulatory burnout. ... Another consideration is finding a time frame that, as SIFMA says, is “workable for all market participants” and can help all investors cut systemic risk. ... A third speed bump ... is the lack of a regulatory mandate, as many industry analysts have mentioned. While firms may be weary of regulatory overhauls, they are required by law to give these efforts priority. Minus the enforcement powers of regulators, T+2 may never become a reality.How the Regulators Got It So Wrong(April 25, 2014)Government regulators, including Wall Street overseers, undercut their reform efforts by making rules that are so specific that people are focused on the fine print and not on resolving problems. So says Philip K. Howard, a lawyer and author of the new book “The Rule of Nobody: Saving America From Dead Laws and Broken Government.”... Howard used the Volcker Rule — the effort by regulators to stop banks from engaging in proprietary trading — as an example of regulatory excess. ... “It will be nothing but loopholes,” Howard says. “The more words there are, the sooner the Wall Street Whiz Kids will figure out what words are not there, and they’ll figure out how to make trades in those interstices.”The answer is to step back from the regulatory printing press and take Howard’s advice and set goals much like the Ten Commandments, the U.S. Constitution and the Golden Rule. If we had taken this approach at the onset of the reform efforts for Wall Street, we might be much better off than our current state, which consists of a mountain of 14,000 pages of Dodd-Frank Act fine print, about half of the 243 DFA rules written with no end in sight to the rancor in creating them, and only the lawyers benefiting.FALL 2014 | FTF NEWS MAGAZINE