The purpose of this paper is to define and explain the purpose behind The Dodd-Frank Wall Street Reform and Consumer Protection Act. “The Dodd-Frank Wall Street Reform and Consumer Protection Act is a United States federal law that places regulation of the financial industry in the hands of the government” (techtarget.com, 2017, para, 1). This paper aims to describe what led to the existence of Dodd-Frank, the protections and concerns it sought to address, and the exceptions where its limitations could be considered.
The Dodd-Frank Wall Street Reform and Consumer Protection Act was created in response to The Great Recession. The financial regulatory system that was in place at the time was the principal cause that alluded to that financial …show more content…
1). The Dodd-Frank Act helps to “address persistent issues affecting the financial industry and prevent another recession by ceasing banks from gambling with depositors' money under The Volcker Rule, which bans banks from using or owning hedge funds for their own profit. The Dodd-Frank Act also oversees credit rating agencies, regulates credit cards, loans and mortgages, and increases supervision of insurance” (Amadeo, 2017, para. 8-16). It is these stringent regulations that have allowed the protection of borrowers from unethical lending and mortgage practices by banks. This instrumental piece of legislation has impeded corporate greed from bringing the country to financial ruin …show more content…
Supporters of the Act, such as US Representative Louise Slaughter, believe “this law ended the perverse notion of ‘too-big-to-fail’. It has enacted historic protections which have prevented another crash and protects consumers from many of the abuses that contributed to The Great Recession” (Slaughter, 2017, para. 3). However, for many on Wall Street, Dodd-Frank is regarded as an overreaction to the recession of 2008, one that will push investors to the sidelines, burden financial institutions with cumbersome rules, and stop overall economic growth (Koba, 2013, para. 32). Detractors of the Act argue that Dodd-Frank “created slow-downs in lending, essentially preventing consumers’ ability to get personal and small business loans. Dodd-Frank detractors also argue that the legislation created a lack of liquidity in the market, which in turn resulted in U.S. businesses losing ground to foreign competition and, in some cases, eliminating jobs” (financialengines.com, 2017, para.
The Dodd-Frank Wall Street Reform and Consumer Protection Act was created in response to The Great Recession. The financial regulatory system that was in place at the time was the principal cause that alluded to that financial …show more content…
1). The Dodd-Frank Act helps to “address persistent issues affecting the financial industry and prevent another recession by ceasing banks from gambling with depositors' money under The Volcker Rule, which bans banks from using or owning hedge funds for their own profit. The Dodd-Frank Act also oversees credit rating agencies, regulates credit cards, loans and mortgages, and increases supervision of insurance” (Amadeo, 2017, para. 8-16). It is these stringent regulations that have allowed the protection of borrowers from unethical lending and mortgage practices by banks. This instrumental piece of legislation has impeded corporate greed from bringing the country to financial ruin …show more content…
Supporters of the Act, such as US Representative Louise Slaughter, believe “this law ended the perverse notion of ‘too-big-to-fail’. It has enacted historic protections which have prevented another crash and protects consumers from many of the abuses that contributed to The Great Recession” (Slaughter, 2017, para. 3). However, for many on Wall Street, Dodd-Frank is regarded as an overreaction to the recession of 2008, one that will push investors to the sidelines, burden financial institutions with cumbersome rules, and stop overall economic growth (Koba, 2013, para. 32). Detractors of the Act argue that Dodd-Frank “created slow-downs in lending, essentially preventing consumers’ ability to get personal and small business loans. Dodd-Frank detractors also argue that the legislation created a lack of liquidity in the market, which in turn resulted in U.S. businesses losing ground to foreign competition and, in some cases, eliminating jobs” (financialengines.com, 2017, para.