Dodd Frank Act Essay

673 words - 3 pages

Summarize and assess the Dodd-Frank Act and it likely effects on financial markets.
The Dodd-Frank Wall Street Reform and Consumer Protection Act was created to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end “too big to fail,” to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes. It was proposed by Barney Frank from the House of Representatives and Chris Dodd from the Senate Banking Committee, and then signed into federal law by President Obama on July 21, 2010. This act is a way of producing financial regulatory reform in ...view middle of the document...

Many people on Wall Street see the Dodd-Frank act as an overreaction to the recession of 2008, and some see it as a way to protect their investors and cut down risk. The Dodd-Frank Act threatens small businesses through its complex regulations that favor large financial firms. It gives the SEC a new set of responsibilities that distracts it from its core mission. Dodd-Frank threatens to raise prices consumers pay which will increase bank fees and drive low-income customers away. By Dodd-Frank forcing complex derivatives into clearinghouses, these entities may be too large to manage safely and lead to more economic problems. The Volcker Rule is proving to be difficult to implement and will interfere with the functioning of the market. The Dodd-Frank Act has been a major move from the government. "It was doomed at the outset and nothing can possibly salvage it. We might even have been better off without it," said Arthur Levitt, a former chairman of the Securities and Exchange Commission. Even though the health of the financial services industry has improved,...

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