The Dodd-Frank Wall Street Reform and Consumer Protection Act (henceforth, the “Dodd-Frank Act”), was signed into law by President Obama on Wednesday July 21, 2010. The Act crosses over 2,300 pages and affects virtually every part of the U.S. financial services sector. The goals ascribed to the Act by its proponents in Congress and by the President include restoring public confidence in the financial system, preventing another fiscal crisis Dodd-Frank Act , and permitting any future asset bubble to be detected and deleted before another fiscal crisis ensues.
The Dodd-Frank Act effects a profound increase in regulation of the financial services sector. The Act provides U.S. governmental authorities more funds, more information and more energy. In broad and significant places, the Act endows regulators with completely discretionary authority to compose and translate new rules.
The coming months and years will show the answers to important questions that will determine how efficiently this increased regulatory existence will advance the Act’s goals: Will capital and talent flow to pockets of fund that the new regulations don’t reach? Will new products make the regulations irrelevant? Will the Act have consequences on businesses? Will U.S. companies lose business to foreign competitors? Will innovation stifle? Will credit’s availability to be diminished by prices and uncertainty?
We analyze the Dodd-Frank Act and the business implications expected to flow from it, depending on the text approved by the House of Representatives. A few of the provisions may be changed by subsequent legislation implementing”technical corrections” based on amendments made in the Senate. Our analysis covers the following aspects of the Act:
Systemic and oversight Risk. The Act gives authorities new settlement authority, creates a new council to monitor and address systemic risk, and affects the mandate of the Federal Reserve.
Orderly Liquidation Authority. Regulators will get authority under the Act to take control of if their failure would pose a threat to the stability of america and liquidate troubled companies. We explore the kinds of financial firms subject to this jurisdiction, the components of the systemic threat determination, as well as the mechanisms and financing of the liquidation procedure.