The Dodd–Frank Wall Street Reform and Consumer Protection Act, commonly referred to as Dodd–Frank, is a
United States federal law
The law of the United States comprises many levels of codified and uncodified forms of law, of which the most important is the nation's Constitution, which prescribes the foundation of the federal government of the United States, as well as ...
that was enacted on July 21, 2010. The law overhauled
financial regulation
Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the stability and integrity of the financial system. This may be handled ...
in the aftermath of the
Great Recession
The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At ...
, and it made changes affecting all federal financial regulatory agencies and almost every part of the nation's financial services industry.
Responding to widespread calls for changes to the financial regulatory system, in June 2009, President
Barack Obama
Barack Hussein Obama II ( ; born August 4, 1961) is an American politician who served as the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, Obama was the first African-American president of the U ...
introduced a proposal for a "sweeping overhaul of the United States financial regulatory system, a transformation on a scale not seen since the reforms that followed the
Great Depression
The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
". Legislation based on his proposal was introduced in the
United States House of Representatives
The United States House of Representatives, often referred to as the House of Representatives, the U.S. House, or simply the House, is the Lower house, lower chamber of the United States Congress, with the United States Senate, Senate being ...
by Congressman
Barney Frank
Barnett Frank (born March 31, 1940) is a former American politician. He served as a member of the U.S. House of Representatives from Massachusetts from 1981 to 2013. A Democrat, Frank served as chairman of the House Financial Services Committee ...
(D-MA) and in the
United States Senate
The United States Senate is the upper chamber of the United States Congress, with the House of Representatives being the lower chamber. Together they compose the national bicameral legislature of the United States.
The composition and pow ...
by Senator
Chris Dodd
Christopher John Dodd (born May 27, 1944) is an American lobbyist, lawyer, and Democratic Party politician who served as a United States senator from Connecticut from 1981 to 2011. Dodd is the longest-serving senator in Connecticut's history. H ...
(D-CT). Most congressional support for Dodd–Frank came from members of the
Democratic Party Democratic Party most often refers to:
*Democratic Party (United States)
Democratic Party and similar terms may also refer to:
Active parties Africa
*Botswana Democratic Party
*Democratic Party of Equatorial Guinea
*Gabonese Democratic Party
*Demo ...
; three Senate
Republicans voted for the bill, allowing it to overcome the
Senate filibuster
A filibuster is a tactic used in the U.S. Senate to delay or block a vote on a measure by preventing debate on it from ending. The Senate's rules place few restrictions on debate; in general, if no other senator is speaking, a senator who seek ...
.
Dodd–Frank reorganized the financial regulatory system, eliminating the
Office of Thrift Supervision
The Office of Thrift Supervision (OTS) was a List of federal agencies in the United States, United States federal agency under the United States Department of the Treasury, Department of the Treasury that chartered, supervised, and regulated all ...
, assigning new responsibilities to existing agencies like the
Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures cred ...
, and creating new agencies like the
Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, payday lenders, mortg ...
(CFPB). The CFPB was charged with protecting consumers against abuses related to credit cards, mortgages, and other financial products. The act also created the
Financial Stability Oversight Council
The Financial Stability Oversight Council (FSOC) is a United States federal government organization, established by Title I of the Dodd–Frank Wall Street Reform and Consumer Protection Act, which was signed into law by President Barack Obama on ...
and the
Office of Financial Research
The Office of Financial Research (OFR) is an independent bureau within the United States Department of the Treasury that was established by the Dodd–Frank Wall Street Reform and Consumer Protection Act, whose passage in 2010 was a legislative ...
to identify threats to the financial stability of the United States, and gave the
Federal Reserve
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
new powers to regulate systemically important institutions. To handle the liquidation of large companies, the act created the Orderly Liquidation Authority. One provision, the
Volcker Rule
The Volcker Rule iof the Dodd–Frank Wall Street Reform and Consumer Protection Act (). The rule was originally proposed by American economist and former United States Federal Reserve Chairman Paul Volcker to restrict United States banks from ma ...
, restricts banks from making certain kinds of speculative investments. The act also repealed the exemption from regulation for security-based
swaps, requiring
credit-default swaps
A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default (by the debtor) or other credit event. That is, the seller of the CDS insures the buyer against som ...
and other transactions to be cleared through either exchanges or clearinghouses. Other provisions affect issues such as
corporate governance
Corporate governance is defined, described or delineated in diverse ways, depending on the writer's purpose. Writers focused on a disciplinary interest or context (such as accounting, finance, law, or management) often adopt narrow definitions th ...
,
1256 Contracts, and
credit rating agencies
A credit rating agency (CRA, also called a ratings service) is a company that assigns credit ratings, which rate a debtor's ability to pay back debt by making timely principal and interest payments and the likelihood of default. An agency may ra ...
.
Dodd–Frank is generally regarded as one of the most significant laws enacted during the
presidency of Barack Obama
Barack Obama's tenure as the 44th president of the United States began with his first inauguration on January 20, 2009, and ended on January 20, 2017. A Democrat from Illinois, Obama took office following a decisive victory over Republican n ...
. Studies have found the Dodd–Frank Act has improved financial stability and
consumer protection
Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace. Consumer protection measures are often established by law. Such laws are intended to prevent business ...
, although there has been debate regarding its economic effects. In 2017,
Federal Reserve
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
Chairwoman
Janet Yellen
Janet Louise Yellen (born August 13, 1946) is an American economist serving as the 78th United States secretary of the treasury since January 26, 2021. She previously served as the 15th chair of the Federal Reserve from 2014 to 2018. Yellen is t ...
stated that "the balance of research suggests that the core reforms we have put in place have substantially boosted resilience without unduly limiting credit availability or economic growth." Some critics argue it failed to provide adequate regulation to the financial industry; others, such as the
American Action Forum and
RealClearPolicy
RealClearPolitics (RCP) is an American political news website and polling data aggregator formed in 2000 by former options trader John McIntyre and former advertising agency account executive Tom Bevan. The site features selected political ...
, argued that the law had a negative impact on economic growth and small banks. A partial repeal to the Dodd–Frank Act, leaving in place its central structure, was passed in 2018 with the
Economic Growth, Regulatory Relief and Consumer Protection Act.
Origins and proposal
![NYUGDPFinancialShare](https://upload.wikimedia.org/wikipedia/commons/9/92/NYUGDPFinancialShare.jpg)
The
Financial crisis of 2007–2008
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fi ...
led to widespread calls for changes in the regulatory system. In June 2009, President Obama introduced a proposal for a "sweeping overhaul of the United States financial regulatory system, a transformation on a scale not seen since the reforms that followed the Great Depression".
[Sources:
* Initial speech: Obama B. (June 17, 2009)]
Remarks by the President on 21st Century Financial Regulatory Reform
. White House.
* Original 89-page proposal document at GPO
A New Foundation : rebuilding financial supervision and regulation
.
Obama's Financial Reform Plan: The Condensed Version
. ''Wall Street Journal''.
As the finalized bill emerged from conference, President Obama said that it included 90 percent of the reforms he had proposed. 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
The derivative of a function is the rate of change of the function's output relative to its input value.
Derivative may also refer to:
In mathematics and economics
* Brzozowski derivative in the theory of formal languages
* Formal derivative, an ...
(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 crisis, including a "resolution regime" complementing the existing Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures cred ...
(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
A credit rating agency (CRA, also called a ratings service) is a company that assigns credit ratings, which rate a debtor's ability to pay back debt by making timely principal and interest payments and the likelihood of default. An agency may ra ...
At President Obama's request, Congress later added the Volcker Rule
The Volcker Rule iof the Dodd–Frank Wall Street Reform and Consumer Protection Act (). The rule was originally proposed by American economist and former United States Federal Reserve Chairman Paul Volcker to restrict United States banks from ma ...
to this proposal in January 2010.[
]
Legislative response and passage
The bills that came after Obama's proposal were largely consistent with the proposal, but contained some additional provisions and differences in implementation.
The Volcker Rule
The Volcker Rule iof the Dodd–Frank Wall Street Reform and Consumer Protection Act (). The rule was originally proposed by American economist and former United States Federal Reserve Chairman Paul Volcker to restrict United States banks from ma ...
was not included in Obama's initial June 2009 proposal, but Obama proposed the rule[Obama on the Volcker Rule:
*
* ] later in January 2010, after the House bill had passed. The rule, which prohibits depository banks from proprietary trading
Proprietary trading (also known as prop trading) occurs when a trader trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments with the firm's own money (instead of using depositors' money) in order to m ...
(similar to the prohibition of combined investment and commercial banking in the Glass–Steagall Act), was passed only in the Senate bill,[ and the conference committee enacted the rule in a weakened form, Section 619 of the bill, that allowed banks to invest up to 3 percent of their tier 1 capital in private equity and hedge funds as well as trade for hedging purposes.
On December 2, 2009, revised versions of the bill were introduced in the ]House of Representatives
House of Representatives is the name of legislative bodies in many countries and sub-national entitles. In many countries, the House of Representatives is the lower house of a bicameral legislature, with the corresponding upper house often c ...
by then–financial services committee chairman Barney Frank
Barnett Frank (born March 31, 1940) is a former American politician. He served as a member of the U.S. House of Representatives from Massachusetts from 1981 to 2013. A Democrat, Frank served as chairman of the House Financial Services Committee ...
, and in the Senate Banking Committee
The United States Senate Committee on Banking, Housing, and Urban Affairs (formerly the Committee on Banking and Currency), also known as the Senate Banking Committee, has jurisdiction over matters related to banks and banking, price controls, ...
by former chairman Chris Dodd
Christopher John Dodd (born May 27, 1944) is an American lobbyist, lawyer, and Democratic Party politician who served as a United States senator from Connecticut from 1981 to 2011. Dodd is the longest-serving senator in Connecticut's history. H ...
. The initial version of the bill passed the House largely along party lines in December by a vote of 223 to 202, and passed the Senate with amendments in May 2010 with a vote of 59 to 39 again largely along party lines.
The bill then moved to conference committee
A committee or commission is a body of one or more persons subordinate to a deliberative assembly. A committee is not itself considered to be a form of assembly. Usually, the assembly sends matters into a committee as a way to explore them more ...
, where the Senate bill was used as the base text although a few House provisions were included in the bill's base text. The final bill passed the Senate in a vote of 60-to-39, the minimum margin necessary to defeat a filibuster
A filibuster is a political procedure in which one or more members of a legislative body prolong debate on proposed legislation so as to delay or entirely prevent decision. It is sometimes referred to as "talking a bill to death" or "talking out ...
. Olympia Snowe
Olympia Jean Snowe (; born February 21, 1947) is an American businesswoman and politician who was a United States Senator from Maine from 1995 to 2013. Snowe, a member of the Republican Party, became known for her ability to influence the outcom ...
, Susan Collins
Susan Margaret Collins (born December 7, 1952) is an American politician serving as the senior United States senator from Maine. A member of the Republican Party, she has held her seat since 1997 and is Maine's longest-serving member of Co ...
, and Scott Brown Scott Brown may refer to:
Sportsmen
*Scott Brown (American football), American college football coach of Kentucky State
* Scott Brown (baseball) (born 1956), former Major League Baseball pitcher for the Cincinnati Reds
*Scott Brown (footballer, bor ...
were the only Republican senators who voted for the bill, while Russ Feingold
Russell Dana Feingold ( ; born March 2, 1953) is an American lawyer and politician who served as a United States Senator from Wisconsin from 1993 to 2011. A member of the Democratic Party, he was its nominee in the 2016 election for the same U ...
was the lone Senate Democrat to vote against the bill.
One provision on which the White House did not take a position[ and remained in the final bill][ allows the SEC to rule on " proxy access"—meaning that qualifying shareholders, including groups, can modify the corporate ]proxy statement
A proxy statement is a statement required of a firm when soliciting shareholder votes. This statement is filed in advance of the annual meeting. The firm needs to file a proxy statement, otherwise known as a Form DEF 14A (Definitive Proxy Statemen ...
sent to shareholders to include their own director nominees, with the rules set by the SEC. This rule was unsuccessfully challenged in conference committee by Chris Dodd, who—under pressure from the White House—submitted an amendment limiting that access and ability to nominate directors only to single shareholders who have over 5 percent of the company and have held the stock for at least two years.[Proxy access rule:
*
* ]
The " Durbin amendment" is a provision in the final bill aimed at reducing debit card interchange fees
Interchange fee is a term used in the payment card industry to describe a fee paid between banks for the acceptance of card-based transactions. Usually for sales/services transactions it is a fee that a merchant's bank (the "acquiring bank") pay ...
for merchants and increasing competition in payment processing. The provision was not in the House bill;[ it began as an amendment to the Senate bill from ]Dick Durbin
Richard Joseph Durbin (born November 21, 1944) is an American lawyer and politician serving as the senior United States senator from Illinois, a seat he has held since 1997. A member of the Democratic Party, Durbin has served as the Senate De ...
and led to lobbying against it.
The ''New York Times'' published a comparison of the two bills prior to their reconciliation. On June 25, 2010, conferees finished reconciling the House and Senate versions of the bills and four days later filed a conference report. The conference committee changed the name of the Act from the "Restoring American Financial Stability Act of 2010". The House passed the conference report, 237–192 on June 30, 2010. On July 15, the Senate passed the Act, 60–39. President Obama signed the bill into law on July 21, 2010.
Repeal efforts
Since the passage of Dodd–Frank, many Republicans have called for a partial or total repeal of Dodd–Frank. On June 9, 2017, The Financial Choice Act, legislation that would "undo significant parts" of Dodd–Frank, passed the House 233–186.
On March 14, 2018, the Senate passed the Economic Growth, Regulatory Relief and Consumer Protection Act exempting dozens of U.S. banks from the Dodd–Frank Act's banking regulations. On May 22, 2018, the law passed in the House of Representatives. On May 24, 2018, President Trump
Donald John Trump (born June 14, 1946) is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021.
Trump graduated from the Wharton School of the University of Pe ...
signed the partial repeal into law.
Overview
The Dodd–Frank Wall Street Reform and Consumer Protection Act is categorized into 16 titles and, by one law firm's count, it requires that regulators create 243 rules, conduct 67 studies, and issue 22 periodic reports.[Davis Polk. (9 July 2010)]
Summary of the Dodd–Frank Wall Street Reform and Consumer Protection Act, Passed by the House of Representatives on June 30, 2010.
The stated aim of the legislation is
The Act changes the existing regulatory structure, by creating a number of new agencies (while merging and removing others) in an effort to streamline the regulatory process, increasing oversight of specific institutions regarded as a systemic risk, amending the Federal Reserve Act
The Federal Reserve Act was passed by the 63rd United States Congress and signed into law by President Woodrow Wilson on December 23, 1913. The law created the Federal Reserve System, the central banking system of the United States.
The Pani ...
, promoting transparency, and additional changes. The Act's intentions are to provide rigorous standards and supervision to protect the economy and American consumers, investors and businesses; end taxpayer-funded bailout
A bailout is the provision of financial help to a corporation or country which otherwise would be on the brink of bankruptcy.
A bailout differs from the term ''bail-in'' (coined in 2010) under which the bondholders or depositors of global sys ...
s of financial institutions; provide for an advanced warning system on the stability of the economy; create new rules on executive compensation and corporate governance; and eliminate certain loopholes that led to the 2008 economic recession. The new agencies are either granted explicit power over a particular aspect of financial regulation, or that power is transferred from an existing agency. All of the new agencies, and some existing ones that are not currently required to do so, are also compelled to report to Congress on an annual (or biannual) basis, to present the results of current plans and explain future goals. Important new agencies created include the Financial Stability Oversight Council
The Financial Stability Oversight Council (FSOC) is a United States federal government organization, established by Title I of the Dodd–Frank Wall Street Reform and Consumer Protection Act, which was signed into law by President Barack Obama on ...
, the Office of Financial Research
The Office of Financial Research (OFR) is an independent bureau within the United States Department of the Treasury that was established by the Dodd–Frank Wall Street Reform and Consumer Protection Act, whose passage in 2010 was a legislative ...
, and the Bureau of Consumer Financial Protection
The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, payday lenders, mortga ...
.
Of the existing agencies, changes are proposed, ranging from new powers to the transfer of powers in an effort to enhance the regulatory system. The institutions affected by these changes include most of the regulatory agencies currently involved in monitoring the financial system (Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures cred ...
(FDIC), U.S. Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
(SEC), Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all nation ...
(OCC), Federal Reserve
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
(the "Fed"), the Securities Investor Protection Corporation
The Securities Investor Protection Corporation (SIPC ) is a federally mandated, non-profit, member-funded, United States corporation created under the Securities Investor Protection Act (SIPA) of 1970 that mandates membership of most US-registere ...
(SIPC), etc.), and the final elimination of the Office of Thrift Supervision
The Office of Thrift Supervision (OTS) was a List of federal agencies in the United States, United States federal agency under the United States Department of the Treasury, Department of the Treasury that chartered, supervised, and regulated all ...
(further described in Title III—Transfer of Powers to the Comptroller, the FDIC, and the FED).
As a practical matter, prior to the passage of Dodd–Frank, investment advisers were not required to register with the SEC if the investment adviser had fewer than 15 clients during the previous 12 months and did not hold himself out generally to the public as an investment adviser. The act eliminates that exemption, rendering numerous additional investment advisers, hedge funds, and private equity firms subject to new registration requirements. However, the Act also shifted oversight of non-exempt investment advisers with less than $100 million in assets under management and not registered in more than 15 states to state regulators. A study published in the ''American Economic Review
The ''American Economic Review'' is a monthly peer-reviewed academic journal published by the American Economic Association. First published in 1911, it is considered one of the most prestigious and highly distinguished journals in the field of ec ...
'' in 2019 (b
Ben Charoenwong
of the National University of Singapore
The National University of Singapore (NUS) is a national public research university in Singapore. Founded in 1905 as the Straits Settlements and Federated Malay States Government Medical School, NUS is the oldest autonomous university in the c ...
Alan Kwan
at Hong Kong University
The University of Hong Kong (HKU) (Chinese: 香港大學) is a public research university in Hong Kong. Founded in 1887 as the Hong Kong College of Medicine for Chinese, it is the oldest tertiary institution in Hong Kong. HKU was also the fir ...
, an
Tarik Umar
at Rice University
William Marsh Rice University (Rice University) is a Private university, private research university in Houston, Houston, Texas. It is on a 300-acre campus near the Houston Museum District and adjacent to the Texas Medical Center. Rice is ranke ...
) found that this switch in enforcement to state regulators increased misconduct among investment advisers by thirty to forty percent, with a bigger increase in areas with less sophisticated clients, less competition, and among advisers with more conflicts of interest, most likely because on average state regulators have less resources and enforcement capacity compared to the SEC.
Certain non-bank financial institution
A non-banking financial institution (NBFI) or non-bank financial company (NBFC) is a financial institution that does not have a full banking license or is not supervised by a national or international banking regulatory agency. NBFC facilitate b ...
s and their subsidiaries will be supervised by the Fed in the same manner and to the same extent as if they were a bank holding company.
To the extent that the Act affects all federal financial regulatory agencies, eliminating one (the Office of Thrift Supervision
The Office of Thrift Supervision (OTS) was a List of federal agencies in the United States, United States federal agency under the United States Department of the Treasury, Department of the Treasury that chartered, supervised, and regulated all ...
) and creating two (Financial Stability Oversight Council and the Office of Financial Research) in addition to several consumer protection agencies, including the Bureau of Consumer Financial Protection, this legislation in many ways represents a change in the way America's financial markets will operate in the future. Few provisions of the Act became effective when the bill was signed.
Provisions
The laws has various titles relating to
* Financial stability
* Orderly liquidation authority
* Transfer of Powers to the Comptroller, the FDIC, and the Fed
* Regulation of Advisers to Hedge Funds and Others
* Insurance
* Improvements to Regulation
* Wall Street Transparency and Accountability
* Payment, Clearing, and Settlement Supervision
* Investor Protections and Improvements to the Regulation of Securities
* Bureau of Consumer Financial Protection
The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, payday lenders, mortga ...
* Federal Reserve System Provisions
* Improving Access to Mainstream Financial Institutions
* Pay It Back Act
* Mortgage Reform and Anti-Predatory Lending Act
* Miscellaneous Provisions
* Section 1256 Contracts
Reaction
Legislative reaction
Senator Chris Dodd
Christopher John Dodd (born May 27, 1944) is an American lobbyist, lawyer, and Democratic Party politician who served as a United States senator from Connecticut from 1981 to 2011. Dodd is the longest-serving senator in Connecticut's history. H ...
, who co-proposed the legislation, has classified the legislation as "sweeping, bold, comprehensive, ndlong overdue". In regards to the Fed and what he regarded as their failure to protect consumers, Dodd voiced his opinion that " ..I really want the Federal Reserve to get back to its core enterprises ..We saw over the last number of years when they took on consumer protection responsibilities and the regulation of bank holding companies, it was an abysmal failure. So the idea that we're going to go back and expand those roles and functions at the expense of the vitality of the core functions that they're designed to perform is going in the wrong way." However, Dodd pointed out that the transfer of powers from the Fed to other agencies should not be construed as criticism of Fed Chairman Ben Bernanke, but rather that " 's about putting together an architecture that works".
Dodd felt it would be a “huge mistake” to craft the bill under the auspices of bipartisan compromise stating “(y)ou’re given very few moments in history to make this kind of a difference, and we're trying to do that." Put another way, Dodd construed the lack of Republican
Republican can refer to:
Political ideology
* An advocate of a republic, a type of government that is not a monarchy or dictatorship, and is usually associated with the rule of law.
** Republicanism, the ideology in support of republics or agains ...
amendments as a sign " ..that the bill is a strong one".
Richard Shelby, the top-ranking Republican on the Senate Banking Committee and the one who proposed the changes to the Fed governance, voiced his reasons for why he felt the changes needed to be made: "It's an obvious conflict of interest ..It's basically a case where the banks are choosing or having a big voice in choosing their regulator. It's unheard of." Democratic Senator Jack Reed agreed, saying "The whole governance and operation of the Federal Reserve has to be reviewed and should be reviewed. I don't think we can just assume, you know, business as usual."
Barney Frank
Barnett Frank (born March 31, 1940) is a former American politician. He served as a member of the U.S. House of Representatives from Massachusetts from 1981 to 2013. A Democrat, Frank served as chairman of the House Financial Services Committee ...
, who in 2003 told auditors warning him of the risk caused by government subsidies in the mortgage market, "I want to roll the dice a little bit more in this situation toward subsidized housing" proposed his own legislative package of financial reforms in the House
A house is a single-unit residential building. It may range in complexity from a rudimentary hut to a complex structure of wood, masonry, concrete or other material, outfitted with plumbing, electrical, and heating, ventilation, and air condi ...
, did not comment on the Stability Act directly, but rather indicated that he was pleased that reform efforts were happening at all: "Obviously, the bills aren't going to be identical, but it confirms that we are moving in the same direction and reaffirms my confidence that we are going to be able to get an appropriate, effective reform package passed very soon."
During a Senate Republican press conference on April 21, 2010, Richard Shelby reported that he and Dodd were meeting "every day" and were attempting to forge a bipartisan bill. Shelby also expressed his optimism that a "good bill" will be reached, and that "we're closer than ever." Saxby Chambliss
Clarence Saxby Chambliss (born November 10, 1943) is an American lawyer and retired politician who was a United States Senator from Georgia from 2003 to 2015. A member of the Republican Party, he previously served as a U.S. Representative from ...
echoed Shelby's sentiments, saying, "I feel exactly as Senator Shelby does about the Banking Committee negotiations," but voiced his concern about maintaining an active derivatives market and not driving financial firms overseas. Kay Bailey Hutchison indicated her desire to see state banks have access to the Fed, while Orrin Hatch
Orrin Grant Hatch (March 22, 1934 – April 23, 2022) was an American attorney and politician who served as a United States senator from Utah from 1977 to 2019. Hatch's 42-year Senate tenure made him the longest-serving Republican U.S. senato ...
had concerns over transparency, and the lack of Fannie
Fannie is a given name. Notable people with the name include:
* Fannie B. Damon (1857-1939), American writer, magazine editor
* Fannie B. Linderman (1875-1960), British-born American teacher, entertainer, and writer
* Fannie Barrier Williams (18 ...
and Freddy reform.
Industry and other groups
Ed Yingling, president of the American Bankers Association
The American Bankers Association (ABA) is a Washington, D.C.-based trade association for the U.S. banking industry, founded in 1875. They lobby for banks of all sizes and charters, including community banks, regional and money center banks, sav ...
, regarded the reforms as haphazard and dangerous, saying, "To some degree, it looks like they're just blowing up everything for the sake of change. . . . If this were to happen, the regulatory system would be in chaos for years. You have to look at the real-world impact of this."
The Securities Industry and Financial Markets Association
The Securities Industry and Financial Markets Association (SIFMA) is a United States industry trade group representing securities firms, banks, and asset management companies. SIFMA was formed on November 1, 2006, from the merger of the Bond M ...
(SIFMA)—the "top Wall Street lobby"—has expressed support for the law, and has urged Congress not to change or repeal it in order to prevent a stronger law from passing.
A survey by Rimes Technologies Corp of senior investment banking figures in the U.S. and UK showed that 86 percent expect that Dodd–Frank will significantly increase the cost of their data operations. Big banks "complained for years about a key feature of the Dodd–Frank overhaul requiring them to keep billions of dollars in cash in reserves." In 2019 some, such as Wells-Fargo, offered higher deposit rates to government lenders, freeing up deposits previously held to maintain the required liquid coverage ratio.
Continental European scholars have also discussed the necessity of far-reaching banking reforms in light of the current crisis of confidence, recommending the adoption of binding regulation
Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. For ...
s that would go further than Dodd–Frank—notably in France where SFAF
The French Society of Financial Analysts (french: Société Française des Analystes Financiers (SFAF)) is the main professional organisation representing members of the French financial industry. It was created in 1961 and currently has over 1500 ...
and banking experts have argued that, beyond national legislation
Legislation is the process or result of enrolled bill, enrolling, enactment of a bill, enacting, or promulgation, promulgating laws by a legislature, parliament, or analogous Government, governing body. Before an item of legislation becomes law i ...
s, such rules should be adopted and implemented within the broader context of separation of powers
Separation of powers refers to the division of a state's government into branches, each with separate, independent powers and responsibilities, so that the powers of one branch are not in conflict with those of the other branches. The typic ...
in European Union law. This perspective has gained ground after the unraveling of the Libor scandal in July 2012, with mainstream opinion leaders such as the ''Financial Times
The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nik ...
'' editorialists calling for the adoption of an EU-wide "Glass Steagall II".[ quoting FT Editorial Page.]
Job creation
An editorial in the ''Wall Street Journal'' speculated that the law would make it more expensive for startups
A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend t ...
to raise capital and create new jobs; other opinion pieces suggest that such an impact would be due to a reduction in fraud or other misconduct.
Corporate governance issues and U.S. public corporations
The Dodd–Frank Act has several provisions that call upon the Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
(SEC) to implement several new rules and regulations that will affect corporate governance
Corporate governance is defined, described or delineated in diverse ways, depending on the writer's purpose. Writers focused on a disciplinary interest or context (such as accounting, finance, law, or management) often adopt narrow definitions th ...
issues surrounding public corporations in the United States. Many of the provisions put in place by Dodd–Frank require the SEC to implement new regulations, but intentionally do not give specifics as to when regulations should be adopted or exactly what the regulations should be. This will allow the SEC to implement new regulations over several years and make adjustments as it analyzes the environment. Public companies will have to work to adopt new policies in order to adapt to the changing regulatory environment they will face over the coming years.
Section 951 of Dodd–Frank deals with executive compensation. The provisions require the SEC to implement rules that require proxy statements for shareholder meetings to include a vote for shareholders to approve executive compensation by voting on "say on pay
Say on pay is a term used for a role in corporate law whereby a firm's shareholders have the right to vote on the remuneration of executives.
Often described in corporate governance or management theory as an agency problem, a corporation's manag ...
" and " golden parachutes." SEC regulations require that at least once every three years shareholders have a non-binding say-on-pay vote on executive compensation. While shareholders are required to have a say-on-pay vote at least every three years, they can also elect to vote annually, every two years, or every third year. The regulations also require that shareholders have a vote at least every six years to decide how often they would like to have say-on-pay votes. In addition, companies are required to disclose any golden parachute compensation that may be paid out to executives in the case of a merger, acquisition, or sale of major assets. Proxy statement
A proxy statement is a statement required of a firm when soliciting shareholder votes. This statement is filed in advance of the annual meeting. The firm needs to file a proxy statement, otherwise known as a Form DEF 14A (Definitive Proxy Statemen ...
s must also give shareholders the chance to cast a non-binding vote to approve golden parachute policies. Although these votes are non-binding and do not take precedence over the decisions of the board, failure to give the results of votes due consideration can cause negative shareholder reactions. Regulations covering these requirements were implemented in January 2011 and took effect in April 2011.
Section 952 of Dodd–Frank deals with independent compensation committee
Executive compensation is composed of both the financial compensation (executive pay) and other non-financial benefits received by an executive from their employing firm in return for their service. It is typically a mixture of fixed salary, variab ...
s as well as their advisors and legal teams. These provisions require the SEC to make national stock exchange
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for th ...
s set standards for the compensation committees of publicly traded companies listed on these exchanges. Under these standards national stock exchanges are prohibited from listing public companies that do not have an independent compensation committee. To insure that compensation committees remain independent, the SEC is required to identify any areas that may create a potential conflict of interest and work to define exactly what requirements must be met for the committee to be considered independent. Some of the areas examined for conflicts of interest include other services provided by advisors, personal relationships between advisors and shareholders, advisor fees as a percentage of their company's revenue, and advisors' stock holdings. These provisions also cover advisors and legal teams serving compensation committees by requiring proxy statements to disclose any compensation consultants and include a review of each to ensure no conflicts of interest exist. Compensation committees are fully responsible for selecting advisors and determining their compensation. Final regulations covering issues surrounding compensation committees were implemented in June 2012 by the SEC and took effect in July 2012. Under these regulations the New York Stock Exchange (NYSE) and NASDAQ
The Nasdaq Stock Market () (National Association of Securities Dealers Automated Quotations Stock Market) is an American stock exchange based in New York City. It is the most active stock trading venue in the US by volume, and ranked second ...
also added their own rules regarding the retention of committee advisors. These regulations were approved by the SEC in 2013 and took full effect in early 2014.
Section 953 of Dodd–Frank deals with pay for performance policies to determine executive compensation. Provisions from this section require the SEC to make regulations regarding the disclosure of executive compensation as well as regulations on how executive compensation is determined. New regulations require that compensation paid to executives be directly linked to financial performance including consideration of any changes in the value of the company's stock price or value of dividends paid out. The compensation of executives and the financial performance justifying it are both required to be disclosed. In addition, regulations require that CEO compensation be disclosed alongside the median employee compensation excluding CEO compensation, along with ratios comparing levels of compensation between the two. Regulations regarding pay for performance were proposed by the SEC in September 2013 and were adopted in August 2015.
Section 954 of Dodd–Frank deals with clawback
The term clawback or claw back refers to any money or benefits that have been given out, but are required to be returned (clawed back) due to special circumstances or events, such as the monies having been received as the result of a financial crim ...
of compensation policies, which work to ensure that executives do not profit from inaccurate financial reporting. These provisions require the SEC to create regulations that must be adopted by national stock exchanges, which in turn require publicly traded companies who wish to be listed on the exchange to have clawback policies. These policies require executives to return inappropriately awarded compensation, as set forth in section 953 regarding pay for performance, in the case of an accounting restatement due to noncompliance with reporting requirements. If an accounting restatement is made then the company must recover any compensation paid to current or former executives associated with the company the three years prior to the restatement. The SEC proposed regulations dealing with clawback of compensation in July 2015.
Section 955 of Dodd–Frank deals with employees' and directors' hedging practices. These provisions stipulate that the SEC must implement rules requiring public companies to disclose in proxy statements whether or not employees and directors of the company are permitted to hold a short position
In finance, being short in an asset means investing in such a way that the investor will profit if the value of the asset falls. This is the opposite of a more conventional "long" position, where the investor will profit if the value of the ...
on any equity shares of the company. This applies to both employees and directors who are compensated with company stock as well as those who are simply owners of company stock. The SEC proposed rules regarding hedging in February 2015.
Section 957 deals with broker voting and relates to section 951 dealing with executive compensation. While section 951 requires say on pay and golden parachute votes from shareholders, section 957 requires national exchanges to prohibit brokers from voting on executive compensation. In addition, the provisions in this section prevent brokers from voting on any major corporate governance issue as determined by the SEC including the election of board members. This gives shareholders more influence on important issues since brokers tend to vote shares in favor of executives. Brokers may only vote shares if they are directly instructed to do so by shareholders associated with the shares. The SEC approved the listing rules set forth by the NYSE and NASDAQ regarding provisions from section 957 in September 2010.
Additional provisions set forth by Dodd–Frank in section 972 require public companies to disclose in proxy statements reasons for why the current CEO and chairman of the board hold their positions. The same rule applies to new appointments for CEO or chairman of the board. Public companies must find reasons supporting their decisions to retain an existing chairman of the board or CEO or reasons for selecting new ones to keep shareholders informed.
Provisions from Dodd–Frank found in section 922 also address whistle blower
A whistleblower (also written as whistle-blower or whistle blower) is a person, often an employee, who reveals information about activity within a private or public organization that is deemed illegal, immoral, illicit, unsafe or fraudulent. Whi ...
protection. Under new regulations any whistle blowers who voluntarily expose inappropriate behavior in public corporations can be rewarded with substantial compensation and will have their jobs protected. Regulations entitle whistle blowers to between ten and thirty percent of any monetary sanctions put on the corporation above one million dollars. These provisions also enact anti-retaliation rules that entitle whistle blowers the right to have a jury trial if they feel they have been wrongfully terminated as a result of whistle blowing. If the jury finds that whistle blowers have been wrongfully terminated, then they must be reinstated to their positions and receive compensation for any back-pay and legal fees. This rule also applies to any private subsidiaries of public corporations. The SEC put these regulations in place in May 2011.
Section 971 of Dodd–Frank deals with proxy access and shareholders' ability to nominate candidates for director positions in public companies. Provisions in the section allow shareholders to use proxy materials to contact and form groups with other shareholders in order to nominate new potential directors. In the past, activist investors had to pay to have materials prepared and mailed to other investors in order to solicit their help on issues. Any shareholder group that has held at least three percent of voting shares for a period of at least three years is entitled to make director nominations. However, shareholder groups may not nominate more than twenty five percent of a company's board and may always nominate at least one member even if that one nomination would represent over twenty five percent of the board. If multiple shareholder groups make nominations then the nominations from groups with the most voting power will be considered first with additional nominations being considered up to the twenty five percent cap.
Constitutional challenge to Dodd–Frank
On July 12, 2012, the Competitive Enterprise Institute
The Competitive Enterprise Institute (CEI) is a non-profit libertarian think tank founded by the political writer Fred L. Smith Jr. on March 9, 1984, in Washington, D.C., to advance principles of limited government, free enterprise, and individ ...
joined the State National Bank of Big Spring, Texas, and the 60 Plus Association
The 60 Plus American Association of Senior Citizens is an American conservative advocacy group founded in 1992 and based in Alexandria, Virginia. Its stated purpose is to promote solutions to seniors' issues that are grounded in free markets, less ...
as plaintiffs in a lawsuit[''State National Bank of Big Spring v. Geithner''](_blank)
(later retitled ''State National Bank of Big Spring, et al. v. Lew''), no. 12-01032 (D.D.C, filed July 12, 2012); (complaint) filed in the U.S. District Court for the District of Columbia, challenging the constitutionality of provisions of Dodd–Frank. The complaint asked the court to invalidate the law, arguing that it gives the federal government unprecedented, unchecked power. The lawsuit was amended on September 20, 2012, to include the states of Oklahoma
Oklahoma (; Choctaw language, Choctaw: ; chr, ᎣᎧᎳᎰᎹ, ''Okalahoma'' ) is a U.S. state, state in the South Central United States, South Central region of the United States, bordered by Texas on the south and west, Kansas on the nor ...
, South Carolina
)''Animis opibusque parati'' ( for, , Latin, Prepared in mind and resources, links=no)
, anthem = " Carolina";" South Carolina On My Mind"
, Former = Province of South Carolina
, seat = Columbia
, LargestCity = Charleston
, LargestMetro = ...
, and Michigan
Michigan () is a state in the Great Lakes region of the upper Midwestern United States. With a population of nearly 10.12 million and an area of nearly , Michigan is the 10th-largest state by population, the 11th-largest by area, and the ...
as plaintiffs. The states asked the court to review the constitutionality of the Orderly Liquidation Authority established under Title II of Dodd–Frank.
In February 2013 Kansas attorney general Derek Schmidt
Derek Larkin Schmidt (born January 23, 1968) is an American lawyer and politician who has been the Kansas Attorney General since 2011.
A Republican, Schmidt was first elected to office serving in the Kansas Senate, where he represented the 15 ...
announced that Kansas
Kansas () is a state in the Midwestern United States. Its capital is Topeka, and its largest city is Wichita. Kansas is a landlocked state bordered by Nebraska to the north; Missouri to the east; Oklahoma to the south; and Colorado to the ...
along with Alabama
(We dare defend our rights)
, anthem = "Alabama (state song), Alabama"
, image_map = Alabama in United States.svg
, seat = Montgomery, Alabama, Montgomery
, LargestCity = Huntsville, Alabama, Huntsville
, LargestCounty = Baldwin County, Al ...
, Georgia
Georgia most commonly refers to:
* Georgia (country), a country in the Caucasus region of Eurasia
* Georgia (U.S. state), a state in the Southeast United States
Georgia may also refer to:
Places
Historical states and entities
* Related to the ...
, Ohio
Ohio () is a state in the Midwestern region of the United States. Of the fifty U.S. states, it is the 34th-largest by area, and with a population of nearly 11.8 million, is the seventh-most populous and tenth-most densely populated. The sta ...
, Oklahoma
Oklahoma (; Choctaw language, Choctaw: ; chr, ᎣᎧᎳᎰᎹ, ''Okalahoma'' ) is a U.S. state, state in the South Central United States, South Central region of the United States, bordered by Texas on the south and west, Kansas on the nor ...
, Nebraska
Nebraska () is a state in the Midwestern region of the United States. It is bordered by South Dakota to the north; Iowa to the east and Missouri to the southeast, both across the Missouri River; Kansas to the south; Colorado to the southwe ...
, Michigan
Michigan () is a state in the Great Lakes region of the upper Midwestern United States. With a population of nearly 10.12 million and an area of nearly , Michigan is the 10th-largest state by population, the 11th-largest by area, and the ...
, Montana
Montana () is a state in the Mountain West division of the Western United States. It is bordered by Idaho to the west, North Dakota and South Dakota to the east, Wyoming to the south, and the Canadian provinces of Alberta, British Columbi ...
, South Carolina
)''Animis opibusque parati'' ( for, , Latin, Prepared in mind and resources, links=no)
, anthem = " Carolina";" South Carolina On My Mind"
, Former = Province of South Carolina
, seat = Columbia
, LargestCity = Charleston
, LargestMetro = ...
, Texas
Texas (, ; Spanish language, Spanish: ''Texas'', ''Tejas'') is a state in the South Central United States, South Central region of the United States. At 268,596 square miles (695,662 km2), and with more than 29.1 million residents in 2 ...
, and West Virginia
West Virginia is a state in the Appalachian, Mid-Atlantic and Southeastern regions of the United States.The Census Bureau and the Association of American Geographers classify West Virginia as part of the Southern United States while the Bur ...
would join the lawsuit. The second amended complaint included those new states as plaintiffs.
On August 1, 2013, U.S. District Judge Ellen Segal Huvelle dismissed the lawsuit for lack of standing
Standing, also referred to as orthostasis, is a position in which the body is held in an ''erect'' ("orthostatic") position and supported only by the feet. Although seemingly static, the body rocks slightly back and forth from the ankle in the s ...
. In July 2015, the Court of Appeals for the District of Columbia Circuit affirmed in part and reversed in part, holding that the bank, but not the states that later joined the lawsuit, had standing to challenge the law, and returned the case to Huvelle for further proceedings.
On January 14, 2019, the Supreme Court refused to review the District of Columbia Circuit's decision to dismiss their challenge to the constitutionality of the CFPB's structure as an "independent" agency.
Impact
Congressional Budget Office
On April 21, 2010, the CBO released a cost-estimate of enacting the legislation. In its introduction, the CBO briefly discussed the legislation and then went on to generally state that it is unable to assess the cost of financial crises under current law, and added that estimating the cost of similar crises under this legislation (or other proposed ideas) is equally (and inherently) difficult: " ..CBO has not determined whether the estimated costs under the Act would be smaller or larger than the costs of alternative approaches to addressing future financial crises and the risks they pose to the economy as a whole."
In terms of the impact on the federal budget, the CBO estimates that deficits would reduce between 2011–2020, in part due to the risk-based assessment fees levied to initially capitalize the Orderly Liquidation Fund; after which, a growing amount of revenue for the Fund would be derived from interest payments (which are not counted as budgetary receipts, and therefore do not affect the federal deficit, having the effect of negatively impacting budget figures related to the Fund). As such, the CBO projects that eventually the money being paid into the Fund (in the form of fees) would be exceeded by the expenses of the Fund itself.
The cost estimate also raises questions about the time-frame of capitalizing the Fund – their estimate took the projected value of fees collected for the Fund (and interest collected on the Fund) weighed against the expected expense of having to deal with corporate default(s) until 2020. Their conclusion was it would take longer than 10 years to fully capitalize the Fund (at which point they estimated it would be approximately 45 billion), although no specifics beyond that were expressed.
The projection was a $5 billion or more deficit increase in at least one of the four consecutive ten-year periods starting in 2021.
Effects on small banks
Associated Press reported that in response to the costs that the legislation places on banks, some banks have ended the practice of giving their customers free checking. Small banks have been forced to end some businesses such as mortgages and car loans in response to the new regulations. The size of regulatory compliance teams has grown. The Heritage Foundation
The Heritage Foundation (abbreviated to Heritage) is an American conservative think tank based in Washington, D.C. that is primarily geared toward public policy. The foundation took a leading role in the conservative movement during the preside ...
, calling attention to the new ability of borrowers to sue lenders for misjudging their ability to repay a loan, predicted that smaller lenders would be forced to exit the mortgage market due to increased risk. One Harvard study has claimed that smaller banks have been hurt by the regulations of the Dodd–Frank Act, saying "Community banks' share of the US banking assets and lending market fell from over 40% in 1994 to around 20% n 2015
N, or n, is the fourteenth Letter (alphabet), letter in the Latin alphabet, used in the English alphabet, modern English alphabet, the alphabets of other western European languages and others worldwide. Its name in English is English alphabet# ...
" These researchers believed that regulatory barriers fell most heavily on small banks, even though legislators intended to target large financial institutions. Though other experts dispute this claim noting that community banks have been consolidating since the Riegle-Neal Act of 1994 and even claim that community banks have been doing better since 2010 citing the decrease in community bank failures after the act was passed.
Complying with the statute seems to have resulted in job shifting or job creation in the business of fulfilling reporting requirements, while making it more difficult to fire employees who report criminal violations. Opponents of the Dodd–Frank Law believe that it will affect job creation, in a sense that because of stricter regulation unemployment will increase significantly. However, the Office of Management and Budget attempts to "monetize" benefits versus costs to prove the contrary. The result is a positive relationship where benefits exceed costs: "During a 10-year period OMB reviewed 106 major regulations for which cost and benefit data were available ..$136 billion to $651 billion in annual benefits versus $44 billion to $62 billion in annual costs" (Shapiro and Irons, 2011, p. 8).
Scholarly views
According to Federal Reserve Chairwoman Janet Yellen
Janet Louise Yellen (born August 13, 1946) is an American economist serving as the 78th United States secretary of the treasury since January 26, 2021. She previously served as the 15th chair of the Federal Reserve from 2014 to 2018. Yellen is t ...
in August 2017, "The balance of research suggests that the core reforms we have put in place have substantially boosted resilience without unduly limiting credit availability or economic growth."
Some experts have argued that Dodd–Frank does not protect consumers adequately and does not end too big to fail
"Too big to fail" (TBTF) and "too big to jail" is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the great ...
. Research also finds that Dodd-Frank's increased regulation of credit rating agencies negatively impacted financing and investment of firms worried about their credit ratings.
Law professor and bankruptcy expert David Skeel concluded that the law has two major themes: "government partnership with the largest Wall Street banks and financial institutions" and "a system of ad hoc interventions by regulators that are divorced from basic rule-of-law constraints". While he states that "the overall pattern of the legislation is disturbing", he also concludes that some are clearly helpful, such as the derivatives exchanges and the Consumer Financial Protection Bureau.
Regarding the Republican-led rollback of some provisions of Dodd–Frank in 2018, this move from increased regulation after a crisis to deregulation during an economic boom has been a recurrent feature in the United States.
Whistleblower-driven settlements
The SEC's 2017 annual report on the Dodd–Frank whistleblower program stated: "Since the program’s inception, the SEC has ordered wrongdoers in enforcement matters involving whistleblower information to pay over $975 million in total monetary sanctions, including more than $671 million in disgorgement of ill-gotten gains and interest, the majority of which has been...returned to harmed investors." Whistleblowers receive 10–30% of this amount under the Act. A decade after it was created, the SEC whistleblower program has enabled the SEC to take enforcement actions resulting in over $2.5 billion in financial remedies and putting about $500 million in the pockets of defrauded investors. In addition, the incentives have generated more than 33,300 tips.
Consumer Financial Protection Bureau activities
The Act established the Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, payday lenders, mortg ...
(CFPB), which has the mission of protecting consumers in the financial markets. Then-CFPB Director Richard Cordray testified on April 5, 2017 that: "Over the past five years, we have returned almost $12 billion to 29 million consumers and imposed about $600 million in civil penalties." The CFPB publishes a semi-annual report on its activities.
See also
* Brown–Kaufman amendment
* Chicago Stock Exchange
NYSE Chicago, formerly known as the Chicago Stock Exchange (CHX), is a stock exchange in Chicago, Illinois, US. The exchange is a national securities exchange and self-regulatory organization, which operates under the oversight of the U.S. S ...
* Commodity Futures Trading Commission
The Commodity Futures Trading Commission (CFTC) is an independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures, swaps, and certain kinds of options.
The Commodity Exchange Ac ...
* Financial crisis of 2007–2010
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fi ...
* Financial privacy laws in the United States
Financial privacy laws regulate the manner in which financial institutions handle the nonpublic financial information of consumers. In the United States, financial privacy is regulated through laws enacted at the federal and state level. Federal re ...
* Financial regulation
Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the stability and integrity of the financial system. This may be handled ...
* List of financial regulatory authorities by country
The following is an incomplete list of financial regulatory authorities by country.
List
A-B
* Afghanistan - Da Afghanistan Bank (DAB)
* Albania - Albanian Financial Supervisory Authority (FSA)
* Algeria - Commission d'Organisation et de ...
* NASDAQ
The Nasdaq Stock Market () (National Association of Securities Dealers Automated Quotations Stock Market) is an American stock exchange based in New York City. It is the most active stock trading venue in the US by volume, and ranked second ...
* New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed c ...
* Office of Financial Research
The Office of Financial Research (OFR) is an independent bureau within the United States Department of the Treasury that was established by the Dodd–Frank Wall Street Reform and Consumer Protection Act, whose passage in 2010 was a legislative ...
* Regulation D (SEC)
* Regulatory responses to the subprime crisis
Regulatory responses to the subprime crisis addresses various actions taken by governments around the world to address the effects of the subprime mortgage crisis.
Regulators and legislators are considering action regarding lending practices, ...
* Securities Commission
* Securities regulation in the United States
Securities regulation in the United States is the field of U.S. law that covers transactions and other dealings with securities. The term is usually understood to include both federal and state-level regulation by governmental regulatory agencies, ...
* Stock exchange
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for th ...
* Subprime mortgage crisis solutions debate
The Subprime mortgage crisis solutions debate discusses various actions and proposals by economists, government officials, journalists, and business leaders to address the subprime mortgage crisis and broader financial crisis of 2007–08.
Overvi ...
* Swiss referendum "against corporate Rip-offs" of 2013
* ''Trading Places
''Trading Places'' is a 1983 American comedy film directed by John Landis, with a screenplay by Timothy Harris and Herschel Weingrod. Starring Dan Aykroyd, Eddie Murphy, Ralph Bellamy, Don Ameche, Denholm Elliott, and Jamie Lee Curtis, the ...
''
* Volcker Rule
The Volcker Rule iof the Dodd–Frank Wall Street Reform and Consumer Protection Act (). The rule was originally proposed by American economist and former United States Federal Reserve Chairman Paul Volcker to restrict United States banks from ma ...
* Wall Street reform Wall Street reforms are reforms or regulations of the financial industry in the United States.
Wall Street is the home of the country's two largest stock exchanges, and "Wall Street" is a metonym for the United States financial sector. Major W ...
; Related legislation
* 1933: Securities Act of 1933
* 1934: Securities Exchange Act of 1934
* 1938: Temporary National Economic Committee (establishment)
* 1939: Trust Indenture Act of 1939
* 1940: Investment Advisers Act of 1940 The Investment Advisers Act of 1940, codified at through , is a United States federal law that was created to monitor and regulate the activities of investment advisers (also spelled "advisors") as defined by the law. It is the primary source of r ...
* 1940: Investment Company Act of 1940
* 1968: Williams Act (Securities Disclosure Act)
* 1975: Securities and Exchange Act
The Securities Exchange Act of 1934 (also called the Exchange Act, '34 Act, or 1934 Act) (, codified at et seq.) is a law governing the secondary trading of securities (stocks, bonds, and debentures) in the United States of America. A landma ...
* 1982: Garn–St. Germain Depository Institutions Act
The Garn–St Germain Depository Institutions Act of 1982 (, , enacted October 15, 1982) is an Act of Congress that deregulated savings and loan associations and allowed banks to provide adjustable-rate mortgage loans. It is disputed whether the a ...
* 1999: Gramm–Leach–Bliley Act
The Gramm–Leach–Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, () is an act of the 106th United States Congress (1999–2001). It repealed part of the Glass–Steagall Act of 1933, removing barriers in ...
* 2000: Commodity Futures Modernization Act of 2000
The Commodity Futures Modernization Act of 2000 (CFMA) is United States federal legislation that ensured financial products known as over-the-counter (OTC) derivatives remained unregulated. It was signed into law on December 21, 2000 by President ...
* 2002: Sarbanes–Oxley Act
The Sarbanes–Oxley Act of 2002 is a United States federal law that mandates certain practices in financial record keeping and reporting for corporations.
The act, (), also known as the "Public Company Accounting Reform and Investor Protecti ...
* 2003: Fair and Accurate Credit Transactions Act
The Fair and Accurate Credit Transactions Act of 2003 (FACT Act or FACTA, ) is a United States federal law, passed by the United States Congress on November 22, 2003, and signed by President George W. Bush on December 4, 2003, as an amendment to ...
of 2003
* 2006: Credit Rating Agency Reform Act
The Credit Rating Agency Reform Act () is a United States federal law whose goal is to improve ratings quality for the protection of investors and in the public interest by fostering accountability, transparency, and competition in the credit ra ...
of 2006
* 2018: Economic Growth, Regulatory Relief and Consumer Protection Act
Further reading
Financial Reform Summary
– Summary of the legislation, via banking.senate.gov
Dodd Frank – Summary of the Act/Rulemaking and News/Current Events
Report on RAFSA
via banking.senate.gov
Americans for Financial Reform Letters and Statements about the bill
Americans for Financial Reform Letters and Statements about the Act
*
Summary of the Dodd–Frank Wall Street Reform and Consumer Protection Act, Enacted into Law on July 21, 2010" Davis Polk, & Wardwell LLP, downloaded July 24, 2010
Summary of the Dodd–Frank Wall Street Reform and Consumer Protection Act
as provided by the U.S. Senate Banking Committee and published byuseconomy.about.com; downloaded November 29, 2012
The Dodd–Frank Act: a cheat sheet
as provided by Morrison & Foerster in 2010 and published byuseconomy.about.com; downloaded December 1, 2012
Dodd–Frank Act, Commentary and Insights by Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates
By Matthew G. Lamoreaux in Journal of Accountancy September 2010
Dodd–Frank Act, A Brief Legislative History with Links, Reports, & Summaries
Law Librarians' Society of Washington, DC
Dodd–Frank Regulatory Reform Rules
– Every proposed, interim and final rule as tracked by the Federal Reserve Bank of St. Louis
*
The "Pay Ratio Provision" in the Dodd–Frank Act: Legislation to Repeal It in the 113th Congress
Congressional Research Service
The Congressional Research Service (CRS) is a public policy research institute of the United States Congress. Operating within the Library of Congress, it works primarily and directly for members of Congress and their committees and staff on a c ...
Examining Constitutional Deficiencies and Legal Uncertainties in the Dodd–Frank Act: Hearing Before the Subcommittee on Oversight and Investigations of the Committee on Financial Services, U.S. House Of Representatives, One Hundred Thirteenth Congress, First Session, July 9, 2013
Examining How the Dodd–Frank Act Hampers Home Ownership: Hearing Before the Subcommittee on Financial Institutions and Consumer Credit of the Committee on Financial Services, U.S. House of Representatives, One Hundred Thirteenth Congress, First Session, June 18, 2013
References
External links
Dodd-Frank Wall Street Reform and Consumer Protection Act
PDFdetails
as amended in the GPO GPO may refer to:
Government and politics
* General Post Office, Dublin
* General Post Office, in Britain
* Social Security Government Pension Offset, a provision reducing benefits
* Government Pharmaceutical Organization, a Thai state enterpris ...
br>Statute Compilations collection
Dodd-Frank Wall Street Reform and Consumer Protection Act
details
as enacted in the US Statutes at Large
{{DEFAULTSORT:Dodd-Frank Wall Street Reform And Consumer Protection Act
2010 in economics
Acts of the 111th United States Congress
Chris Dodd
Consumer Financial Protection Bureau
Consumer protection legislation
Great Recession in the United States
Insurance in the United States
Presidency of Barack Obama
Systemic risk
United States federal banking legislation