From the Oct. 2 Financial Times:

Marcus Stanley, the policy director of Americans for Financial Reform… thinks Wall Street’s distress cries about market illiquidity are just self-serving nonsense.

“We are believers that Dodd-Frank should not be amended,” he says. But would such a huge, detailed law not have a couple of imperfections that might have some impact on market liquidity, which could have painful effects on the general economy?

“Yes, there are a lot of words in it, but the level of regulatory discretion is massive. Why are we thinking that the [financial] industry and the industry lobby knows better than the regulators? To say that Dodd-Frank is some straitjacket ignores the [truth] that regulators have lots of chances to adjust [its implementation].”

Mr Stanley is a bit more blunt and vocal than the leadership and staff of the US regulators, but he is not out of line with their thinking. As one bank lobbyist says: “I am hoping, based on no evidence, that the Fed board and staff are aware of the seriousness of the credit market liquidity issue. As for the Treasury, they are very thinly staffed on market issues, and very much into controlling the pro-Dodd-Frank message.

“I see no sign that there is any contingency planning for a market crash. I doubt there could be, since their best staff is overtaxed with the task of writing the details of new regulations.”

(Full story available to Financial Times subscribers here.)