Economic Outlook: That boot-heel drag

Bank stocks took the brunt of Monday's stock bashing, just as U.S. Treasury Secretary Timothy Geithner praised the country's regulatory principles.

While shares at Bank of America tumbled 3.99 percent and JPMorgan Chase & Co. shares dropped 2.5 percent, Geithner in a speech in Atlanta said the United States was not like the United Kingdom. The United States would not stoop to loosening regulations in order to attract business, a move that backfired in London, Geithner said.

But regulatory reform is losing ground through strong-arm efforts that attempt to delay creation and implementation of new rules, which are to be written by government agencies and committees.

The law firm Davis Polk is keeping an eye on the rule-writing process mandated in the Dodd-Frank financial overhaul bill and found that about half the deadlines for new rules have been missed, The New York Times reported.

There are 385 new rules or rule changes required in the bill and of those 41 should have been written by now, the law firm said.

Of those 41, only 24 have been completed. Twenty-eight deadlines have been missed.

Rules can also be undermined effectively by withholding funds required to implement or enforce them.

In effect, "There's an attempt to kill this through delay," University of Maryland law professor Michael Greenberger told the Times."The difference between eight or nine months and 24 months could be cataclysmic here," he added.

Said Geithner, weighing in on the topic, "Those in the U.S. financial community who are supporting these efforts to block resources and appointments are looking for leverage over the rules still being written."

It hasn't reached cataclysmic levels yet, but "It's going a lot slower than I had envisioned," said Bart Chilton, a commissioner at the Commodities Futures Trading Commission, where rules on derivative trading are among those being delayed.

In international markets Tuesday, the Nikkei 225 index in Japan added 0.67 percent, while the Shanghai composite index in China rose 0.6 percent. The Hang Seng index in Hong Kong lost 0.35 percent, while the Sensex in India rose 0.41 percent.

The S&P/ASX 200 in Australia was flat, slipping 0.06 percent.

In midday trading in Europe, the FTSE 100 index in Britain rose 0.1 percent, while the DAX 30 in Germany rose 0.51 percent. The CAC 40 in France rose 0.34 percent, while the Stoxx Europe 600 rose marginally, up 0.05 percent.