Dodd Frank Wall Street Reform Case Study

analytical Essay
1191 words
1191 words

Introduction The Dodd-Frank Wall Street Reform and Consumer Protection Act was passed in 2010 in response to the 2008 financial crisis. It aimed to increase financial stability, and to put an end to the “too big to fail” issue plaguing the recession. The problems arose from major corporations, such as General Motors Company and American International Group, Inc., requesting bailouts from the United States Government. Also, the housing bubble burst with regards to mortgages. Major Provisions Just as the Sarbanes-Oxley Act had many provisions, so does the Dodd-Frank Act. A few of the major provisions include Title I, Title VI, Title VII, Title X, among various other provisions impacting the accounting industry. Title I created the Financial …show more content…

Generally, thus far, there has been increased transparency of the financial markets through the creation of exchanges to trade financial derivatives; nonbanks which had few rules to follow are now regulated; the U.S. Treasury has access to an increased collection of data from its investigations; there are stronger markets; and most importantly, there is improved consumer finance protection from financial services institutions. Dodd-Frank focuses on preventing another financial crisis, and this is implemented by increasing capital reserves and the requirement of contingency plans, which will help with faster recovery while minimizing the damage. Contingency plans/ living wills for troubled institutions would minimize the need for government bailouts and minimize the detrimental effect on the economy and public. The increased capital requirements and stress test prepare firms for economic shocks and crises. Nonbank financial institutions, such as Lehman Brothers and AIG, Inc., were not regulated like banks, and their practices were detrimental to the economy. With the Dodd-Frank Act, there is more oversight to regulate; taking measures to prevent another financial crisis. Steps such as the creation of the FSOC could have potentially exposed the problems with AIG, …show more content…

economy. Recovering from the 2008 financial crisis is a long and arduous journey. Some may argue that the Act lead to minimal to no in improvement in the economy. A few of the negative effects, and areas where Dodd-Frank fall short include oversight, reach of act, negative effect to the economy, liquidity, and so on. There are claims that provisions of Dodd-Frank are so overbearing as to be detrimental. For example, “The director of the Consumer Financial Bureau…can declare any consumer-credit product ‘unfair’ or ‘abusive’ and outlaw it.”7 Contrary, some believe there is not enough oversight from the

In this essay, the author

  • Explains that the dodd-frank wall street reform and consumer protection act was passed in 2010 in response to the 2008 financial crisis.
  • Describes the major provisions of the dodd-frank act, including title i, title vi, and title x.
  • Describes the provisions of dodd-frank that impact the accounting industry.
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