There were expectations that the Securities and Exchange Commission – once Chairman Mary Jo White was up-to-speed and two new commissioners installed – would pick up the pace of meeting its Dodd-Frank Act obligations. Instead, proposed and final regulations have emerged at a snail's pace.

Now, one of those new commissioners, Kara Stein, is demanding that her colleagues refocus on the task at hand. “Next month will mark four years since the enactment of the Dodd-Frank Act, and I think it's fair to ask how we're doing on the systemic risk front,” she said during a speech at the Peterson Institute for International Economics in Washington D.C. “To put it charitably, I'll say the answer is mixed.”

There has been some headway, Stein said. The Financial Stability Oversight Council is meeting regularly, and the Treasury Department's Office of Financial Research is up and running, with over 200 staffers monitoring and assessing threats to financial stability.  The Volcker Rule, “a critical step forward in improving financial stability,” is final and the largest banks are submitting resolution plans “to ensure that they don't collapse in a disorderly mess,” Stein said.

“Unfortunately, however, far too many of the substantive reforms mandated by the Dodd-Frank Act are not yet implemented,” she added. Derivatives reforms, for example, “are in legal limbo” at the CFTC and the SEC still has a long way to go. Credit rating agency reforms remain to be done. The swaps “push out” provision hasn't gotten off the ground. The mortgage rules on risk retention aren't finished. And rules to ensure that bank executives don't have pay packages that encourage excessive risk-taking haven't been completed.

“Many of the most important systemic risk reforms of the Dodd-Frank Act just aren't done,” Stein said. “We need to finish these rules now; we cannot afford to wait.”

Stein detailed other concerns as well. “I'm disappointed to see that the FSOC suffers from much more squabbling among regulators than it should,” she said. “The FSOC needs to come together as a team to focus and provide mutual support. I fear that individual members defending their territorial jurisdiction detracts from the critical mission to promote financial stability…The FSOC's mission is far too important to be bogged down in a regulatory turf war.”

Stein also urged her fellow commissioners to adopt new capital requirements for large Wall Street brokerages and address the risks posed by the short-term funding markets they rely upon.

“Although systemic risk has not traditionally been a focus of the SEC, it is now,” Stein said “In my view, the SEC can, and must, play a much larger role in addressing systemic risks.  We need to be working more closely and effectively with the FSOC and OFR. We need to be improving the stability and resilience of the short-term funding markets.  And we need to update and enhance our approaches to capital, leverage, and liquidity for our largest firms and funds.  These efforts should not attempt to wring risk out of the capital markets, but we should instead be focused on strengthening the fabric of our entire financial system.”

Stein's remarks caught the attention of at least one legislator. Sen. Carl Levin (D-Mich.), chairman of the Permanent Subcommittee on Investigations, called her speech “right on target.”

“The SEC has been the slowest financial regulatory agency to get the legally required Dodd-Frank safeguards in place and to address systemic risk issues,” he said in a statement. “Four years after the law went on the books, the SEC still hasn't finalized rules to stop financial firms from betting against their clients, ensure swap dealers have adequate capital, or cure the conflicts of interest undermining the reliability of credit ratings. The SEC needs to stop procrastinating and get the job done.”

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