The Aftermath Of Financial Crisis Of 2008 That Was Caused By Poor Regulation Of The Finance Industry Dodd Frank

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.

The Consumer Financial Protection Bureau (“CFPB”) is tasked with writing and enforcing rules for financial entities to protect consumers from unfair, deceptive or otherwise harmful practices by such entities. A major area of focus for the CFPB is a robust and effective oversight of a financial institution’s third-party providers (vendors) to ensure consumers are not exposed to unnecessary risk of financial or personal harm.

The Consumer Financial Protection Bureau was created in 2010 as a response to the financial crisis of 2008. The government agency was established by the Dodd-Frank Act which President Barack Obama passed as a means of controlling and preventing excessive risk-taking ("Wall Street Reform: The Dodd-Frank Act"). The financial crisis occurred in part because of the limited regulation of financial institutions and the wave of irresponsible mortgage lending (The Economist). Subprime borrowers with poor credit histories and insufficient funds for repaying the loans were allowed to borrow money which they could not pay back, thus in turn initiating a nationwide housing market crash (The Economist). Many of these borrowers were granted these loans because of the poor judgement of banks and financial institutions, thus the government needed to create an institution which would protect consumers against unfair and deceptive practices. The mission of the Consumer Financial Protection Bureau is just that-to protect consumers in the financial marketplace by enforcing federal consumer financial laws (CFPB, 2016). In order to achieve this, the bureau monitors the financial market for potential risks to consumers and supervises companies in order to uncover institutions practicing abusive and fraudulent acts. Developing laws to create a fair market place is a top priority of the bureau, as it works to enforce these rules and regulations and make them more effective. The agency also conducts

The CFPB also governs other types of consumer lending, including credit and debit cards, and addresses consumer complaints. It calls for lenders, excluding automobile lenders, to disclose information in a configuration that is easiest for consumers to understand and understand; an instance is the simplified terms you'll find on credit card applications.

Although no laws have been passed, in 2011 the Consumer Financial Protection Bureau(CFPB) was passed. The CFPB regulates the financial services Americans depend on daily to ensure those services work fairly to the advantage of the American people. Its purpose is to also ensure that the federal consumer financial laws are enforced so that consumers may access markets for financial products and so that the markets are fair and competitive. CFPB aims to make markets safe, very accessible and help customers avoid people who abuse their powers(The

The Consumer Financial Protection Bureau, more commonly referred to as the CFPB, can trace its origins to the 2008 financial meltdown. Authority for the creation of the CFPB stems from the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was named for the bill's sponsors, Sen. Chris Dodd and Rep. Barney Frank. The Dodd-Frank was aimed primarily at regulating banks, the stock exchange, mortgage lenders and similar high-value financial markets. However, the CFPB was also given the power to combat "abusive, unfair or deceptive" practices that impacted average consumers. It is this power that the CFPB has invoked in its war against cash advance loans and other small-dollar, high-risk, short-term loans. The war began almost as soon

The financial crisis that happened during 2007-09 was considered the worst financial crisis in the world since the great depression in the 1930s. It leads to a series of banking failures and also prolonged recession, which have affected millions of Americans and paralyzed the whole financial system. Although it was happened a long time ago, the side effects are still having implications for the economy now. This has become an enormously common topic among economists, hence it plays an extremely important role in the economy. There are many questions that were asked about the financial crisis, one of the most common question that dragged attention was ’’How did the government (Federal Reserve) contributed to the financial crisis?’’

The aim of this bill is to reduce the risk in various aspects of the US financial system. The law also created government agencies, such as the Financial Stability Oversight, Orderly Liquidation Authority, and Consumer Financial Protection Bureau (CFPB). These agencies are tasked to monitor the performance of companies considered as “too big to fail” to prevent serious

A recession is full-proof sign of declined activity within the economic environment. Many economists generally define the attributes of a recession are two consecutive quarters with declining GDP. Many factors contribute to an economy's fall into a recession, but the major cause argued is inflation. As individuals or even businesses try to cut costs and spending this causes GDP to decline, unemployment rate can rise due to less spending which can be one of the combined factors when an economy falls into a recession. Inflation is the general rise in prices of goods and services over a period of time. Inflation can happen for reasons such as higher energy and production costs and that includes governmental debt.

Since the financial crisis of 2008 the SEC’s mission has been to protect investors and win back the trust of the public in capital markets. In efforts to combat fraud and preventing another financial crisis, the SEC has grown their staff and is working on revamping their technological capabilities. For the last 3 years we have seen aggressive enforcement, strategic reforms and new regulations with in the division.

The Dodd-Frank Regulatory Reform Act is one of the most influential regulations in response to the financial crisis. This acts primary focus is to prevent future financial system collapses, by reducing excessive risk taking by financial institutions and by protecting the consumers (Rose & Hudgins, 2013). In addition, the Dodd- Frank Act gives the Federal Reserve the authority to monitor financial institutions and gives them the power to restructure or liquidate firms that are financially inadequate (Investopedia, 2010). Fortunately, since the 2008 financial crisis a number of new regulations have been enacted, the Dodd-Frank Act is the most monumental new regulation, because it seeks to prevent future bank bailouts and the risky behaviors of financial institutions. While these regulations may not be enough to fully prevent another financial crisis, the necessary steps have been taken to minimize the disastrous effects of overt risk taking by financial

The 2008 global financial crisis caused by the US mortgages market and extended to the whole world. Some banks and companies has forced to bankruptcy in this accident and some layoff employees, which increased the unemployment percentage, decreased the wealth and income of consumers and lowered the demand of products, so that the companies would layoff more employees, which becomed a vicious cycle. The accident affect not only the financial industry, but also other industries. After the accident happened, governments released polices to contain it, such as the Dodd-Frank Act. Different countries has fall into recessions in different

The great recession of 2008 affected everyone around the world. The great Recession is considered the second worst economic crisis in American history, behind the Great Depression.

With the development of different types of financial products, the transactions between individuals and financial institutions (such as banks, insurance companies or finance firms) are becoming widespread. Those individuals who use, have used or may use financial services or have invested, or may invest in financial instruments can be named as financial consumers.[ Financial Service and Markets Act 2000, s.1G. ] However, in most of financial transactions, consumers are in disadvantaged positions because of the information asymmetry between the financial institutions and the individuals. Therefore, it is becoming increasingly difficult to ignore financial consumer protection.

The consumer financial protection bureau- CFPB was adopted to focus on the finance of consumers in market. It also helps to educate create awareness among consumers about financial matters. The recent director of CFPB was Richard Cord ray