Dodd Frank Act

Introduction

The Dodd-Frank financial reform and consumer protection (which is named after Congressman Frank and Senator Dodd), was endorsed by President Barack Obama on July 11, 2010, the date on which entered into force. The Law undertakes a profound financial reform covering almost all aspects of the financial services industry in response to the worst financial crisis since the Great Depression, with the goal of restoring investor confidence in the integrity of the financial system. The more substantial reforms of the new securities regulation, except for mortgage market measures or legislation relating exclusively to banking or insurance.

Appropriate risk-limiting regulation and supervisory oversight are surely important to reduce the likelihood of systemic crisis, but we need to anticipate that our best efforts will fail. We need emergency tools to prevent a genuine economic catastrophe. The proposed SEIF requires large financial firms to mutually self-insure against outbreaks of systemic distress, and it gives regulators the power to tailor their intervention.

Dodd-Frank Act and Mortgage Banking Industry

According to Cady North, Senior Finance Policy Analyst at Bloomberg (Too-big-to-fail get Bigger Banks After Dodd-Frank), the statistics of the Federal Deposit Insurance Corporation in 1934 census listed 14,000 banks. Their numbers declined between 1980 and 4666 1995.

Consecutively, it took 47 years for the assets of these banks reached 2,000 billion in 1981 and over 10,000 billion 25 years later in 2006. Exceptional growth in assets gathered in the hands of 7,401 banks. And this movement continues: 53 American banks went bankrupt from 2001 to 2007, 389 since 2009. When a bank fails, its assets do not disappear. They are picked up by other financial institutions among which we find the largest integrators in the sector who are the top 5 major U.S.: JP Morgan, Bank of America, Citigroup, Wells Fargo and Goldman Sachs, or 59% of total assets of U.S. banks. Suffice to say that the disruption of the financial system are a powerful lever for M & A and risk concentration.

This is one of the reasons for the Dodd-Frank Act passed in July 2010. Its aim: to limit the growth of the banking sector and reduce the risk of destabilizing the financial system. Real risks involved when one remembers that helps the Fed during the financial crisis of 2008 were 4,700 billion. In other words, prevent banks from becoming "too big to fail", so that the government is not obliged to use taxpayer money to save the shareholders of big banks and other financial institutions in the event of a crisis. A laudable goal, but except that the Dodd-Frank Act addresses itself the seeds of its own neutralization.

Strengthening the Protection of Investors: Accountability, Consistency and Transparency

The Dodd-Frank creates an agency ("Consumer Financial Protection Agency") with the sole responsibility to ensure investor protection (in place of the seven federal agencies that currently exist with partial responsibilities). The Agency will have powers to issue written guidelines to enforce the legislation with broad jurisdiction over different type products and people, including for the first time, non-bank financial companies, and to ...