The US regulatory agencies will in the coming months be bedevilled by unanticipated adverse outcomes as they translate the Dodd-Frank act’s broad set of principles into a couple of hundred detailed regulations. The act’s underlying premise is that much of what occurred in the market place leading up to the Lehman Brothers bankruptcy was excess (hardly controversial) and that its causes would be readily addressed by this wide-ranging statute (questionable).

The financial system on which Dodd-Frank is being imposed is far more complex than the lawmakers, and even most regulators, apparently contemplate. We will almost certainly end up with a number of regulatory inconsistencies whose consequences cannot be readily anticipated. Early returns on the restructuring do not bode well.

● Shortly after the act’s passage in July 2010, Ford Motor Credit pulled its plans to issue a reported billion-dollar asset-backed security. It required a credit rating, which Ford could not obtain. One of the law’s provisions had made credit-rating organisations legally liable for their opinions about risks. To ensure the issuance of the ABS, the Securities and Exchange Commission in effect suspended the need for a credit rating.