21 Jul Dodd-Frank Hits 5th Birthday

The Dodd–Frank Wall Street Reform and Consumer Protection Act was signed by the President on July 21, 2010. Quite a different world then. Some, like its namesakes (pictured above), think it has made our banking and economic system safer and has been successfully implemented by the regulators. Others say that some smaller banks are hurt by its additional regulation, and the SEC’s implementation could have been stronger.

What we do know: Dodd-Frank was the most dramatic change to the regulation of the financial services industry since the birth of securities regulation during the Great Depression. Its stated purpose: “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.” The basic idea was to coordinate regulation better and more regularly monitor the largest financial institutions so there are earlier warnings of trouble. In particular the new Financial Stability Oversight Council was given sweeping powers to regulate the biggest banks. The apparent goal of many mid-sized institutions: do all they can to avoid hitting the threshold to be regulated by the FSOC.

Wikipedia notes that the law required  that the regulators create 243 rules, conduct 67 studies, and issue 22 periodic reports, at the same time that Congress was cutting the SEC’s budget. But it does appear the SEC is making steady progress, and of course the hope is that the law will greatly improve the chance that we avoid another scary near meltdown of the 2008 variety. Let’s see where we are on D-F’s 10th birthday…