Predicting exactly what the world will look like 11 years after the Dodd-Frank Act was signed into law is a stretch, but history shows that congressional updates to the regulatory structure are cyclical and occur roughly once a decade.
Dodd-Frank was enacted 11 years after Gramm-Leach-Bliley, also known as the Financial Services Modernization Act, was passed into law. A decade earlier Congress passed the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, known as FIRREA, the first of two major bills responding to the thrift debacle.
"Over the course of the next decade, at some point there will be an event or an outcome of sufficient importance or poignancy that there will be action," said James Wilcox, a business professor at the University of California at Berkeley.
But prognostications of what kind of action run the gamut, including everything from a comprehensive housing finance reform plan to new attempts to eliminate "too big to fail" to answering the perennial question of what entities can or can't own a bank.
The next reform effort may well focus on addressing Dodd-Frank's flaws.
Almost everyone in Washington finds some fault with Dodd-Frank. But rather than making smaller, incremental corrections in the short term, Congress could attempt a more comprehensive fix further down the road. To many, Dodd-Frank, which is meant to apply more regulatory pressure on the largest financial companies, tried correcting problems with Gramm-Leach-Bliley, which made it easier for multiline financial conglomerates to operate.
"As time goes on and events happen, people will discover that various parts of the consumer credit rules passed by Dodd-Frank are having all kinds of consequences — some intended, and some recognized as more painful than first realized," Wilcox said. "And smart people will have figured out how to minimize or even evade the spirit of some other rules. So there is bound to be a lot of reworking."
Alternatively, the rush of technological change in financial services could serve as motivation to lawmakers to devise regulatory reforms that keep pace.
"If you look forward in time, as the technology of communications continues to evolve, there is the potential for a whole raft of new structures that provide consumer financial services," said William Longbrake, a former Washington Mutual vice chairman who now teaches at the University of Maryland. "Regulation eventually is going to have to figure out how to respond to that."
Yet to some, Dodd-Frank may have broken the string of meaningful reform packages coming once every decade or so. Its scope far exceeded Gramm-Leach-Bliley. The 2008 financial crisis, which gave rise to Dodd-Frank's, was wider in breadth than the savings and loan crisis that spurred FIRREA and its 1991 follow-up law: the Federal Deposit Insurance Corporation Improvement Act.
"Do I think there will be enough change in the marketplace and enough error that there will be some changes to the legislative landscape in the decade following Dodd-Frank? Yes. But I'm doubtful we will see anything as profound as Dodd-Frank," said Eugene Ludwig, the founder and chief executive of Promontory Financial and a former comptroller of the currency.
Some compared the 2010 overhaul more to the banking reforms that followed the Great Depression, which proved to have more staying power.
"It's worth thinking about whether this period is more akin to the 1930s," Ludwig said. "There was such profound change in the 1930s that it took a long time to digest."
And the slow pace of recovery following the 2008 meltdown may delay the type of booms that prompt broad pushes for deregulation.
"The financial sector will always argue for some deregulation, but I can't imagine it getting much traction for a while, until we've lived through a couple of decades and debated throughout that time, and my hope is that the effects of the combined memories in the financial system and the regulatory agencies will be enough to prevent a major breakdown that requires a major regulatory reorganization," said Donald Kohn, a former vice chairman of the Federal Reserve Board and now a senior fellow at the Brookings Institution.
Even if Congress does move to address innovations in the industry that lack a clear regulatory framework — such as mobile payments or prepaid cards — observers said those are more likely to be addressed in stand-alone laws rather than any broad overhaul.