Earlier this week, The Wall Street Journal published a special Journal Report entitled “CEO Council.” The tag line for the report ominously states: “At the annual meeting of The Wall Street Journal’s CEO Council, the chief executives were looking for signs that the tone in Washington had changed. They didn’t find many.” The report includes a number of articles largely focusing on what the Republican majority in Congress should put on its agenda for the new year to bring “real” change to the US economy.

One of the articles in the Journal Report, in particular, caught my attention. The article is entitled “Is the Financial System Healthier?” and featured edited excerpts of a conversation among Wall Street Journal reporter Dennis Berman and Representative Jeb Hensarling (R-TX), Chairman of the House Financial Services Committee, and Sheila Bair, also a Republican and former Chairman of the Federal Deposit Insurance Corp. Ms. Bair is one of our newest colleagues, having joined DLA Piper as a Senior Policy Advisor, based in our Washington, DC office, late last month. The discussion focused on “how regulation has succeeded, how it has failed, and what happens next.”

In response to Mr. Berman’s question asking whether the Dodd-Frank Act has failed, Ms. Bair replied: “I wouldn’t say Dodd-Frank has failed. Judged by complexity and quantity, we have too much regulation. Judged by effectiveness, we have too little.” Representative Hensarling seemingly agreed, stating “At some point the sheer weight, volume, complexity, uncertainty of the regulatory burden slows economic growth.” His final assessment, however, was more definitive than that of Ms. Bair’s. He said, “I don’t want to say that all of Dodd-Frank is bad. But all in all, I consider Dodd-Frank to be a failure. And I am fearful that we are replanting the same seeds that led us to the crisis in the first place.”

Perhaps predictably, the assessment of the regulation of the financial services industry is divided along political party lines. The article includes a graphic summary of a Pew Research Center telephone survey conducted in September 2013 and, as such, is somewhat dated. According to that survey, however, 64 percent of Republicans surveyed thought that the government had gone too far in regulating financial institutions, while 32 percent of Republicans surveyed believed that the government had not gone far enough. In contrast, 26 percent of Democrats surveyed thought that the government had gone too far in regulating the financial industry, and 62 percent felt that the government had not gone far enough.

This is our final issue of The Financial Report for 2014 and so it is an appropriate time to offer our own assessment of the state of financial regulation. Effective regulation must achieve a careful balance. It must be reasonable and not create barriers, lest it impair economic growth thereby hurting the very persons that such regulation is intended to protect. As indicated by Ms. Bair, perhaps a better solution than highly complex prescriptive rules and supervisory processes is to impose higher capital levels on the banking sector. This might be more effective in disciplining these institutions to bear market losses. She said, “The market can discipline these institutions. The regulatory process cannot.” We sincerely hope that in 2015 the Republican Congress can work with President Obama on a bi-partisan approach to regulation of the financial industry which achieves the balance that Dodd-Frank seemingly has not.