Dodd Frank Wall Street Reform

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'Dodd-Frank Wall Street Reform and Consumer Protection Act ' Abstract The Dodd-Frank Wall Street Reform and Consumer Protection Act is a massive piece of financial reform legislation passed by the Obama administration in July 2010 as a response to the financial crisis of 2008. Named after sponsors U.S. Senator Christopher J. Dodd and U.S. Representative Barney Frank, the act's numerous provisions, spelled out over roughly 2,300 pages, are being implemented over a period of several years and are intended to decrease various risks in the U.S. financial system. The law was initially proposed by the Obama administration in June 2009, when the White House sent a series of proposed bills to Congress. A version of the legislation was introduced…show more content…
In simple terms, Dodd-Frank is a law that places major regulations on the financial industry. It grew out of the Great Recession with the intention of preventing another collapse of a major financial institution like Lehman Brothers. Dodd-Frank is also geared toward protecting consumers with rules like keeping borrowers from abusive lending and mortgage practices by banks. It became the law of the land in 2010 and was named after Senator Christopher J. Dodd (D-CT) and U.S. Representative Barney Frank (D-MA), who were the sponsors of the legislation. But not all of the provisions are in place and some rules are subject to change, as we'll see. The bill contains some 16 major areas of reform and contains hundreds of pages, but we will focus here on what are considered the major rules of regulation. One of the main goals of the Dodd-Frank act is to have banks subjected to a number of regulations along with the possibility of being broken up if any of them are determined to be “too big to fail.” To do that, the act created the Financial Stability Oversight Council (FSOC). It looks out for risks that affect the entire financial…show more content…
To help make them more transparent, a clearinghouse of sorts— similar to the stock exchange—must be set up so these derivative trades can be transacted in public. But Dodd-Frank left it up to the regulators to determine exactly the best way to put this clearinghouse into place. And not all derivatives will be subject to the law. The Securities and Exchange Commission and the Commodity Futures Trading Commission approved a rule that would exempt some energy companies, hedge funds and banks from derivative oversight. Insurance companies affected by Dodd-Frank The law created a new Federal Insurance Office (FIO) under the Treasury Department, which would identify insurance companies, like AIG, that create risk to the entire system. AIG was caught in in a major liquidity crisis when its credit ratings were downgraded in September 2008. The U.S. Federal Reserve Bank had to step in and create an $85 billion emergency fund—taxpayer money—to help AIG meet increased financial payouts. The new FIO will also gather information about the insurance industry and make sure affordable insurance is available to
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