Wall Street banks are using the threat of lawsuits to preventregulators from writing rules mandated by the Dodd-Frank Act, saidBart Chilton, a Democrat on the U.S. Commodity Futures TradingCommission.

“Some regulators live in constant fear and are virtuallyparalyzed by the threat” that they will face “spuriously” filedsuits alleging that the costs and benefits of their rules weren'tadequately considered, Chilton said in a speech prepared for theTrade Tech 2012 conference today in New York. “It is abastardization of the conduct and use of cost-benefit analyses inregulatory rulemaking.”

The CFTC is defending against a challenge filed last year infederal court that the agency overstepped its authority under theDodd-Frank Act and inadequately assessed the costs of new limits onspeculation in oil, natural gas and other commodities. The lawsuitwas filed by the International Swaps and Derivatives AssociationInc. and the Securities Industry and Financial MarketsAssociation.