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The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law by President Barack Obama on July 21st of 2010. Its response to the financial recession of 2007-2008 is widely regarded as being the most significant act of financial reform since President Franklin Roosevelt’s New Deal policies brought an end to the Great Depression. The primary target of the act was the country’s federal-level financial regulatory agencies, all of which were affected by its sweeping changes; subsequently, most of the United States’ financial services industry was also widely affected.
The bill was named for Chris Dodd, the Senate Banking Committee Chairman at the time of its introduction, and Barney Frank, Chairman of the Financial Services Committee in the House of Representatives. Both men were instrumental in the implementation of revisions which ultimately preceded the bill’s passing into law.
What Did the Act Change?
The act reformed the regulatory bodies that oversee Wall Street, following the apparent inability of existing regulations and agencies to effectively prevent the recession of 2007-2008, or to hold anyone definitively responsible for what happened. Through a series of 16 titles within the act itself, new regulatory agencies were created, while existing regulatory agencies were either merged or disbanded. The goal of this was to streamline the process of financial services regulation, increase public transparency, and put an end to crippling economic bailouts of multi-billion-dollar private organizations.
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How Was the Act Implemented?
The act required that affected regulatory agencies create a series of rules to help prevent future recessions, with 243 new rules to be created altogether. It also required a total of 67 in-depth studies, intended to help determine the exact cause of the recession (and how best to prevent one in the future). The previously mentioned set of rules was to be based in part on the result of those studies. By way of a followup, the agencies in question were to create and submit 22 periodic reports. These would serve to illustrate their progress, and to help catch future financial services violations, before they could reach critical mass.
Ongoing Effects of the Act
The new, more streamlined process of financial regulation at the federal level involves a series of agencies empowered to act with regard to specific aspects of the financial industry. The 22 periodic reports previously mentioned are to be issued to congress on an annual or biannual basis, which varies from one report to another. In addition to outlining progress with regard to the stated mission of the act — the increase of transparency within the financial industry, and of efficient regulation over every aspect of the industry — the reports are intended to provide a platform by which regulators may express feedback on how best to continue pursuing their goals in the future.
Would You Like to Know More?
You can view the full text of Dodd-Frank online at the official website of the United States congress. Various agencies, including the US Commodity Futures Trading Commission, have offered their own take on what the bill means to them, and how they have been affected by its implementation.
