Case Study Dodd-Frank

The Consumer Financial Protection Bureau, or CFPB, was created as a tool of financial reform in the legislative package that was authorized by the Dodd-Frank Act, but the law specifically includes terms that prohibit setting interest rate limits, which is contrary to the 36-percent limit that the CFPB is currently trying to mandate as a universal limit on short-term rates. The specifics of the Dodd-Frank Act, according to the www.dodd-frank-act.us, state that the legislation grants, "NO AUTHORITY TO IMPOSE USURY LIMIT" unless such a limit is first passed through due legal processes.

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is commonly referred as the Dodd-Frank Act. This act was passed as a response to the Great Recession in order to prevent potential financial debacle in the future. This regulation has a significant impact on American financial services industry by placing major changes on the financial regulation and agencies since the Great Depression. This paper examines the history and impact of Dodd-Frank Act on American financial services industry.

A survey of 37 economists conducted by the University of Chicago in 2014, for example, found that nearly all believed that without the stimulus, the unemployment rate would have risen higher than it did.” In addition to this, President Obama strategized new regulations to protect consumers and to prevent another financial crisis. In 2009 and 2010, he signed the Credit Card Accountability Responsibility and Disclosure Act, the Dodd-Frank Wall Street Reform and the Consumer Protection Act into law. The CCARD Act restricted and obligated interest rates on credit card companies and obligated them to enact transparent policies. The Dodd-Frank created the Financial Stability Oversight Council and the Consumer Financial Protection Bureau which could disintegrate banks if it was possible to fail for any reason including but not limited to subprime loans.

The legislation was repealed in 1999 when key players from the financial arena urged Congress to pass the Gramm-Leach-Bliley Act to reverse Glass-Steagall’s restrictions on bank securities (Heakal, 2003).

In 2007-2008 the US went into a recession, a financial crisis that has since then taken five years to rebuild. During that time millions of Americans were unemployed and faced many economic struggles which negatively impacted the real estate market causing a multitude of foreclosures. The reason for this recession was because there was no authority over banks and they were not being monitored properly. Banks were able to gamble with the finances of millions of people with no consequences towards their actions. The Dodd Frank Act Wall Street Reform and Consumer Protection Act of 2010 was put into place to make sure that nothing like this ever happened again; The Dodd Frank Act implemented and set laws into place to make sure that banks and financial

Prior to the 2008 economic depression, obtaining a mortgage was relatively simple for home buyers. However, many of those mortgages had provisions that made it difficult for borrowers to repay their mortgages (“Dodd-Frank,” n.d.). As a result, many homeowners lost their homes when they were unable to repay their mortgages, which led to the real estate crisis. In 2010 the Mortgage Reform and Anti-Predatory Lending Act, also known as the Dodd-Frank Act, was enacted to reform how mortgage servicers vetted borrowers and to eliminate the use of predatory loan practices (Cheeseman, 2013, p. 485). Under the Dodd-Frank Act, creditors must establish borrower’s credit history, income and expected income, debt-to-income ratio, and other factors before

The Dodd-Frank Act has a market-saving impact in numerous ways, including but not limited to: Starting a financial stability oversight council which actively monitors the stability of large firms whose bankruptcy could have a major negative impact on the economy, the act also provides money to assist with dismantling financial companies that have been placed in receivership, and prevents tax dollars from being used to prop up such firms, which previously was a large waste of tax payer money. It also stops predatory mortgage firms who lend to people who can't afford it, which helped cause the 2008 financial crisis*. While many Republicans will try to convince you that Wall Street’s heavy regulation is killing small banks and reducing the big

The Dodd-Frank Wall Street Reform and Consumer Protection Act is a mammoth part of financial reform legislation passed by the Obama presidential term in 2010 as a reaction to the financial crisis of 2008. The act's many provisions, implied out over thousands of pages, are scheduled to be taken over a point of several years and are intended to decrease various risks in the U.S. fiscal system. The act established a number of new government agencies tasked with supervision over various components of the act. There are so many provisions, such as financial stability, orderly liquidation authority, transfer of power to comptrollers, FDIC and Fed, Hedge funds, insurance, pay it back Act, and Etc, which contribute to better department and regulations.

“As a result of this movement, the banking laws changed. Congress began to investigate in more depth of the money used to support banks. Eventually Congress changed the level of liquidity of the banks once realizing they were too low.” This movement helped congress recognized a huge flaw in banking services. Also, an act was passed by Barack Obama on July 21, 2010. This act was known as the Dodd-Frank Act. “In the fall of 2008, a financial crisis of a scale and severity not seen in generations left millions of Americans unemployed and resulted in trillions in lost wealth. Our broken financial regulatory system was a principal cause of that crisis. It allowed some irresponsible lenders to use hidden fees and fine print to take advantage of consumers.To make sure that a crisis like this never happens again, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. The most far reaching Wall Street reform in history, Dodd-Frank will prevent the excessive risk-taking that led to the financial crisis. The law also provides common-sense protections for American families, creating new consumer watchdog to prevent mortgage companies and pay-day lenders from exploiting

In the wake of the 2008 financial crisis, a Democrat Congress and President Barack Obama passed the Dodd-Frank Act, which in turn unleashed a flood regulations and created the CFPB. While their intent of protecting the little guy is praiseworthy, the legislation had the opposite effect. Since its inception, the CFPB became

The new consumer protection with this law is that applications such as loan and credit cards must be easy to understand. For example there can’t be any “fine print” that is tricky or hard to understand and there cannot be any hidden fees. Next time banks take big risk and fail the government will no longer bailout them on the reason “too big to fail”. If the bank fails because of their business practices; just like any regular mom and pop store it closes and files bankruptcy.

A process which helps one to dig deep about an admirable subject matter broadens one's thinking and understanding of the subject and fluency of language and terminology used in this respected field. I took part of this process of developing and understanding a subject matter, and felt very rewarding. This process started as an overwhelming work to something I enjoy experiencing.

Q. 1. What were the major factors that led to the recent financial crisis? How did we get here?

Federal Reserve. Member banks would have to report on all investment transactions and loans and stay within set compliance standards. Current non-member Banks needed to be deemed in sound financial condition in order to join the FDIC. The weaker banks were either taken over or shut down. FDIC membership now became mandatory for any bank belonging to the Federal Reserve. Banks were now subject to deeper scrutiny and stronger compliance and needed to adhere to adhere to a higher standard. The end result was that by mid-1934 bank failures had declined drastically and banks by the thousands had reopened after joining the FDIC

It was introduced on March 15, 2010 and approved by the House on June 30, with President Obama signing this Act into law on July 21 2010 (Dodd-Frank Wall Street Reform Act, 2015). This Act regulates credit cards, loans and mortgages, as well as to make hedge funds trades public information. In addition, this Act watches over agencies that are involved with consumer credit ratings and supervises insurance companies in addition to reforming the Federal Reserve. One aspect of this bill would prevent the Fed from making an emergency loan to a single entity, like Bear Stearns or AIG, without Treasury Department approval (Dodd-Frank Wall Street Reform Act, 2015). This act was supported by Sen. Scott Brown of Massachusetts, Sen. Susan Collins and fellow Maine Sen. Olympia Snowe (Patten, 2010). In addition, there were other government officials and managers of established financial institutions who supported this bill. However, there are always those who are opposed to the Dodd – Frank bill including some Republican and Democratic leaders and several corporate CEOs and entrepreneurs in the financial market who value freedom were opposed to these limitations. The reasons they were against this bill was that they thought the bill will ultimately fail to prevent another collapse, as well as they feel that this bill will essentially lessen the readiness of some banks to