The Dodd-Frank Act and its Consequences for the Financial and Banking System
The Great Recession of 2008 brought to light a number of weaknesses in the United States economy that allowed for the stock market crash, housing crisis, and necessitated the bail-out of several important banking companies. In response to the recession and fears of a potential repeat of events, President Barack Obama signed the Dodd-Frank Wall Street Reform Act into federal law in 2010. The act brought with it the most radical financial regulation reform in U.S history since the Great Depression. It completely changed the American financial regulatory environment, affecting the activities of all federal financial regulatory agencies, along with nearly every part of the financial services industry of the U.S. The legislation of this act was designed to limit the possibility of widespread risk in the financial system as well as to solve the problem that arises with large financial institutions that are just “too big to fail” and have come to expect large government bailouts whenever they consequences of their poor business decisions catch up to them. The new regulatory oversight and consumer protections this act introduced were …show more content…
It establishes two new government departments these being the FSOC (Financial Stability Oversight Council), as well as the office of financial research which is an office within the treasury. This title also expands the authoritative powers granted to the Board of Governors of the Federal Reserve System, allowing them to supervise certain nonbank financial companies, along with large bank holding companies that were not previously under the scope of the board of governors but could have a significant effect on the state of United States
The Great Recession of 2008 brought to light a number of weaknesses in the United States economy that allowed for the stock market crash, housing crisis, and necessitated the bail-out of several important banking companies. In response to the recession and fears of a potential repeat of events, President Barack Obama signed the Dodd-Frank Wall Street Reform Act into federal law in 2010. The act brought with it the most radical financial regulation reform in U.S history since the Great Depression. It completely changed the American financial regulatory environment, affecting the activities of all federal financial regulatory agencies, along with nearly every part of the financial services industry of the U.S. The legislation of this act was designed to limit the possibility of widespread risk in the financial system as well as to solve the problem that arises with large financial institutions that are just “too big to fail” and have come to expect large government bailouts whenever they consequences of their poor business decisions catch up to them. The new regulatory oversight and consumer protections this act introduced were …show more content…
It establishes two new government departments these being the FSOC (Financial Stability Oversight Council), as well as the office of financial research which is an office within the treasury. This title also expands the authoritative powers granted to the Board of Governors of the Federal Reserve System, allowing them to supervise certain nonbank financial companies, along with large bank holding companies that were not previously under the scope of the board of governors but could have a significant effect on the state of United States