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Dodd-Frank Act: Deeper Look into Opposing Views Allison Susi MB 636: Law & Ethics in Business Professor Anizkovich July 15, 2017, Dodd-Frank Act: Deeper Look into Opposing Views The Dodd-Frank Act, was passed on July 21, 2010, was initiated as a response to the recession that occurred in the late 2000s. The Act made changes in the American Financial regulatory environment that affected all federal financial regulatory agencies and almost every part of the nation's financial services industry. Major components of Obama's original proposal, listed by the order in which they appear in the "A New Foundation" outline, include:
The consolidation of regulatory agencies, elimination of the national thrift charter, and new oversight council to evaluate systemic risk; Comprehensive regulation of financial markets, including increased transparency of derivatives (bringing them onto exchanges); Consumer protection reforms, including a new consumer protection agency and uniform standards for "plain vanilla" products as well as strengthened investor protection; Tools for financial crises, including a "resolution regime" complementing the existing Federal Deposit Insurance Corporation (FDIC) authority to allow for orderly winding down of bankrupt firms, and including a proposal that the Federal Reserve (the "Fed") receive authorization from the Treasury for extensions of credit in "unusual or exigent circumstances"; Various measures aimed at increasing international standards and cooperation including proposals related to improved accounting and tightened regulation of credit rating agencies.
With the downfall of the great recession of the late 2000s largely attributed to the low regulation and high reliance on large banks, one of the main goals of the Dodd-Frank Act was to subject banks to more harsh regulations. The act created the Financial Stability Oversight Council to address common issues that seem to continuously affect the financial industry and prevent the country from falling into another recession in the near future. Having the banking system under a watchful eye, the act seeks to eliminate the need for future taxpayer-funded bailouts. One important key that is laced into the Dodd-Frank Act is whistleblowing provisioning. This attempts to obtain cooperation from both financial insiders and fight corruption in the financial industry. The overall goal is to encourage those who may have original information about security violations to report them to the government and in turn, be rewarded financially.
The Dodd-Frank Act certainly was not the first of this nature it followed after both the Sarbanes Oxley Act and the Gram Leach Bliley Act passed in 2002 and 1999, respectively. Along with the Dodd-Frank Act came the creation of the Consumer Financial Protection Bureau, which is to protect consumers from large, unregulated ba...
