--- title: Promontory’s Role In The Dodd-Frank Game description: More than three years after the passage of the Dodd-Frank financial reform bill, only one third of the rules it said were needed to strengthen... canonical: https://time.com/archive/7181259/one-firms-role-in-the-dodd-frank-game/ author: TIME Staff article:opinion: false article:content_tier: free article:published_time: 2013-09-16T09:45:35.000Z article:modified_time: 2026-02-25T05:46:44.724Z article:section: Politics og:title: Promontory’s Role In The Dodd-Frank Game og:description: More than three years after the passage of the Dodd-Frank financial reform bill, only one third of the rules it said were needed to strengthen... og:url: https://time.com/archive/7181259/one-firms-role-in-the-dodd-frank-game/ og:site_name: TIME og:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt7d1dbdfe5e2bf3cb/698a9d32b21a9ce16a511405/ap090929035229.jpg?branch=production&width=1200&quality=75&auto=webp&crop=16:9 og:image:width: 3888 og:image:height: 2187 og:image:alt: Eugene Ludwig, Martin Baily og:type: article twitter:card: summary_large_image twitter:title: Promontory’s Role In The Dodd-Frank Game twitter:description: More than three years after the passage of the Dodd-Frank financial reform bill, only one third of the rules it said were needed to strengthen... twitter:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt7d1dbdfe5e2bf3cb/698a9d32b21a9ce16a511405/ap090929035229.jpg?branch=production&width=1200&quality=75&auto=webp&crop=16:9 ---  * [Politics](/section/politics/) # Promontory's Role In The Dodd-Frank Game > Sponsored content. 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It explains the politics, personalities and power dynamics behind the headlines, twice a week. #### Where can I get analysis of Washington politics by email? D.C. Brief is TIME's free Washington politics newsletter, available at time.com/newsletters. It is written by a TIME senior correspondent who covers the capital full time. #### Who writes TIME's D.C. Brief? Philip Elliott, a senior correspondent at TIME, writes D.C. Brief. #### Is D.C. Brief free? Yes. D.C. Brief is free at time.com/newsletters. ### Sources * TIME Newsletters: [time.com/newsletters](/c/time-nl-dcbrief-2026q3/newsletters?i=168c3dce-8c78-488e-9748-6b8c54feb94e&cr=time-nl-dcbrief-2026q3-v1) by [TIME Staff](https://time.com/author/time-staff/) Sep 16, 2013 9:45 AM UTC  Promontory Financial Group Chief Executive Officer Eugene Ludwig, left, and Martin Baily, senior fellow, Economic Studies, The Brookings Institute are seen on Capitol Hill in Washington, Tuesday, Sept. 29, 2009, prior to testifying before the Senate Banking Committee hearing on Strengthening and Streamlining Prudential Bank Supervision. (AP Photo/Harry Hamburg) Promontory Financial Group Chief Executive Officer Eugene Ludwig, left, and Martin Baily, senior fellow, Economic Studies, The Brookings Institute are seen on Capitol Hill in Washington, Tuesday, Sept. 29, 2009, prior to testifying before the Senate Banking Committee hearing on Strengthening and Streamlining Prudential Bank Supervision. (AP Photo/Harry Hamburg) AP by [TIME Staff](https://time.com/author/time-staff/) Sep 16, 2013 9:45 AM UTC More than three years after the passage of the Dodd-Frank financial reform bill, only one third of the rules it said were needed to strengthen the financial system and prevent another crash have been implemented. That is largely because the law punted many of the details of reform to regulators who have been engaged in lengthy debates over what the rules should say. That debate has in turn been the target of intense lobbying by financial institutions. But registered lobbyists aren’t the only ones affecting the process. I have a [story](http://content.time.com/time/subscriber/article/0,33009,2151795,00.html) in the current issue of TIME on the role independent consultants play in the financial services system. Sometimes these firms, like Deloitte, PricewaterhouseCoopers, and Ernst and Young, act as investigators and enforcers at the behest of overworked and under-resourced government regulators. At other times the firms are hired by the banks to advise them and to present expert opinions on their behalf to the government. Some critics in Congress and elsewhere say the two roles create the potential for a conflict of interest and want new rules to ensure the roles don’t overlap. And they say that Dodd-Frank has replaced weak regulation with outsourced regulation that is subject to undue influence. Says Senator Sherrod Brown of Ohio, who held a hearing on the issue last spring, “It’s hard to expect real accountability when we trade lax regulation from government agencies with regulation by private companies paid for by Wall Street.” As part of my reporting, I came across some examples of one consulting firm’s involvement in trying to shape Dodd-Frank, both when the bill was being written on the Hill and during its implementation at regulatory agencies. The firm, Promontory Financial Group, is a successful and respected consultancy that specializes in advising banks on how to comply with complex regulations. Among its ranks are scores of former regulators, including former Securities and Exchange Commission chiefs, Fed enforcers and top regulators from the Office of the Comptroller of the Currency (OCC). My story in the magazine looks at a few examples of controversial oversight work Promontory has undertaken for the government, and [reports](http://swampland.time.com/2013/09/12/new-york-state-regulator-issues-subpoenas-in-money-laundering-investigations/) on a recent subpoena the firm received from New York State regulators relating to its work in one case. Because the firm has so many experienced regulators, it was present at the conception of Dodd-Frank virtually from the start. In Oct. 2008, when Senate Banking Committee chairman Chris Dodd empaneled his first hearing of outside experts on the crisis he said he wanted “to have this committee, both formally and informally, meet with knowledgeable people — and there are some at this very panel who can be of help in this regard — as to what the architecture and structures of our financial services system ought to look like.” Two of the five panelists were from Promontory: former SEC chair Arthur Levitt, a Promontory Board member, and Eugene Ludwig, its founder and CEO. It’s not clear how much Dodd ended up leaning on Promontory or Ludwig, but Ludwig did play a role. During the bill’s writing, Dodd staffers told then-head of the head of the Federal Deposit Insurance Corporation, Sheila Bair, that Ludwig was arguing to fold the FDIC and other regulators into the OCC. “We received feedback that Gene was encouraging the ‘single regulator idea’,” Bair recalls. “I called him and let him know in no uncertain terms my strong concerns that doing so would have stripped the FDIC of meaningful supervisory authority.” A coalition of regulators and small bankers defeated the single regulator idea. Ludwig also was pushing another issue at the time. As a side business, he had founded a company in which he has a minority stake that runs a service called CDARS, or Certificate of Deposit Account Registry Service. CDARS allow the very rich to distribute millions of dollars in $250,000 increments in small banks to get the maximum allowed FDIC insurance, which is designed to protect small depositors. The FDIC limited how much CDARS money troubled small banks could take, since it calculated that money was more likely to cause a run than that of an individual small depositor. Behind the scenes, Ludwig tried and failed to insert language in Dodd-Frank that would have loosened restrictions on failing banks’ acceptance of CDARS money, several people familiar with the matter, including Bair, tell TIME. Promontory officials say their firm played virtually no role in influencing the writing of Dodd-Frank. Ludwig declined to comment on the record. On background a senior Promontory official said that Ludwig had long supported the idea of a single regulator for the financial system. The CEO of the company that runs the CDARS service, Mark Jacobsen, said, “We were not involved in anything regarding Dodd-Frank.” Once Dodd-Frank was passed, the action moved to the regulators who would write and implement the rules. Promontory began advising and representing clients on the rulemaking process. Promontory says it has an informal group of people working on Dodd-Frank that is tapped by clients in a number of ways, according to managing director Konrad Alt. Promontory helps clients, “understand how this regulation or that one is being developed and \[helps them\] think through different proposed regulations so that they can understand the potential implications for their business.” Alt says Promontory helps clients write their public comment letters on proposed rules, and arranges and attends meetings with regulators to “explain” to the officials what the affects of Dodd-Frank rule making would be on Promontory’s clients. One area that Promontory has weighed in on is the Volcker rule, named after the former Federal Reserve chief who has argued that banks should be barred from investing the money of their depositors for institutional profit. The chief counsel at OCC until 2012, Julie Williams, tells Time she recalls taking a meeting with Ludwig about the Volcker Rule during the rulemaking process. It was one of several meetings she remembers taking with Promontory during the period. Williams left the OCC earlier this year and was replaced at OCC by Amy Friend a managing director at Promontory. Friend advised Promontory clients on Dodd-Frank and the Volcker rule, according to the public disclosure documents she filed when she went to OCC. Among her clients were big banks like Morgan Stanley, which has billions of dollars at stake in whether it can make speculative bids in the stock market with depositors’ money. When Friend left Promontory for the OCC she recused herself from all Volcker Rulemaking. Promontory declined to say how much it pays Williams now that she is at the firm. However, Friend, who occupied a lower position than Williams at Promontory, publicly disclosed her salary and bonuses at the firm when she moved to OCC: nearly $1.2 million from January 2012 through January 2013. Of Friend’s work on Volcker, Promontory spokeswoman Debra Cope says, “Virtually all of our engagements include strict confidentiality and non-disclosure agreements. We cannot provide specific client information to third parties.” As for the broader work of the informal Dodd-Frank group as described by Managing Director Konrad Alt, Ms. Cope says, “There is no formal ‘Dodd-Frank group’ at Promontory.” Cope says that none of its top 10 engagements for the past couple of years has been Dodd-Frank focused. Cope says, “Promontory is dedicated to helping its clients comply with the letter and spirit of the law. We provide the valuable tools and breadth of expertise that let them do so, making them safer and stronger and helping them meet the expectations of regulators and consumers alike.” Senator Brown says that there need to be clearer rules on how consultants like Promontory are used by regulators. “We know that independent consultants like Promontory provide both oversight services and advisory services that some times even border on advocacy,” Brown said in a statement. “Consumers and taxpayers deserve clear guidance from regulators to prevent conflicts of interest,” Brown says. He is working on a bill that would allow regulators to punish consultants that violate agency rules. _To read Massimo Calabresi’s article in this week’s issue of_ TIME_, “Bank Oversight for Hire,” please_ [_click here_](http://content.time.com/time/magazine/article/0,9171,2151795,00.html)_._ ```json [{"@context":"https://schema.org","@type":"NewsArticle","@id":"https://time.com/archive/7181259/one-firms-role-in-the-dodd-frank-game/","mainEntityOfPage":{"@type":"WebPage","@id":"https://time.com/archive/7181259/one-firms-role-in-the-dodd-frank-game/"},"headline":"Promontory's Role In The Dodd-Frank Game","datePublished":"2013-09-16T09:45:35.000Z","dateModified":"2026-02-25T05:46:44.724Z","description":"More than three years after the passage of the Dodd-Frank financial reform bill, only one third of the rules it said were needed to strengthen...","url":"https://time.com/archive/7181259/one-firms-role-in-the-dodd-frank-game/","keywords":["Boston"],"thumbnailUrl":"https://static.time.com/v3/assets/bltea6093859af6183b/blt7d1dbdfe5e2bf3cb/698a9d32b21a9ce16a511405/ap090929035229.jpg?branch=production&width=1200&quality=75&auto=webp&crop=1200:675&height=675","author":[{"@type":"Person","name":"TIME Staff","url":"https://time.com/author/time-staff/"}],"articleSection":"Politics","image":[{"@type":"ImageObject","url":"https://static.time.com/v3/assets/bltea6093859af6183b/blt7d1dbdfe5e2bf3cb/698a9d32b21a9ce16a511405/ap090929035229.jpg?branch=production&width=1200&quality=75&auto=webp&crop=1200:675&height=675","width":1200,"height":675,"headline":"Eugene Ludwig, Martin Baily","caption":"Eugene Ludwig, Martin Baily","creditText":"AP","representativeOfPage":true}],"publisher":{"@type":"Organization","name":"Time","url":"https://time.com/","logo":{"@type":"ImageObject","url":"https://time.com/images/logo.png","width":528,"height":156},"foundingDate":"March 3, 1923","sameAs":["https://www.facebook.com/time","https://www.instagram.com/time/?hl=en","https://twitter.com/time","https://www.pinterest.com/timemagazine"]}},{"@context":"https://schema.org","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"item":{"@id":"https://time.com/section/politics/","name":"Politics"}},{"@type":"ListItem","position":2,"item":{"@id":"https://time.com/archive/7181259/one-firms-role-in-the-dodd-frank-game/","name":"Promontory's Role In The Dodd-Frank Game"}}]}] ```