Frank Dodd Act Summary And The Consumer Protection Act
Frank-Dodd act summary becomes one of the laws applied to financial markets. This is included in the most comprehensive economic reform law since the Glass-Steagall Act. Glass-Steagall became the rule governing banks after the fall of the stock market in 1929.
The Gramm-Leach-Bliley Act was revoked in 1999. It allows banks to invest depositors’ funds in unregulated derivatives once again. This deregulation helped lead to the 2008 recession. Dodd-Frank reporting is named after two members of Congress who created it.
Senator Chris Dodd introduced the dodd-frank act pdf summary on March 15, 2010. On May 20, he passed the Senate US Representative Barney Frank revised it at the House of Representatives, which approved it on June 30. On July 21, 2010, then President Obama signed the Act into law. On May 22, 2018, Congress passed dodd frank rollback for these banks.
The Implementation of Dodd-Frank Summary
Here are eight ways Dodd-Frank implements its goals and makes your world safer. This reason also explains why changes need to be made.
- Keep an eye on Wall Street. The Financial Stability Oversight Council classifies the risks that influence the whole financial industry. If a company becomes too large, FSOC will hand it over to the Federal Reserve for closer supervision.
- Paying attention to the Giant Insurance Company. Dodd-Frank created a new Federal Insurance Office under the Ministry of Finance. It identifies insurance companies that create risks for the entire system as did American International Group Inc.
- Stopping Banks from Gambling with Savings Money. The Volcker Rule prohibits banks from using or owning hedge funds for their benefit. Banks can only use hedge funds at the customer’s request.
- Review the Federal Reserve Bailouts. The Government Accountability Office can review the Fed’s emergency loans in the future, and the Ministry of Finance must approve new powers. This calms critics who consider the Fed excessive with its bailout funds.
- Monitor Risky Derivatives. The Securities and Exchange Commission or the Commodity Futures Trading Commission regulates the most dangerous derivatives. They are traded in a clearinghouse, similar to a stock exchange. Regulators can also identify excessive risks and bring them to the attention of policymakers before a major crisis occurs.
- One of the causes of the 2008 financial crisis was that the trading of hedging funds was so complex that no one understood it. When house prices fall, so does the value of derivatives traded. To fix this, Dodd-Frank requires all hedge funds to register with the SEC.
- Supervising Credit Rating Agencies. Dodd-Frank made the Office of Credit Ratings at the SEC. This regulates credit rating agencies such as Moody’s and Standard & Poors. These agents help cause a crisis by saying some derivatives are safe when they don’t.
- Manage Credit Cards, Loans, and Mortgages. The Financial Consumer Protection Bureau consolidated many supervisory agencies and placed them under the US Treasury. It oversees credit and debit and credit card reporting agents.
Frank-Dodd act summary creates an agent to make sure the bank does not overcharge for credit cards, debit cards, and loans. This requires them to explain risk mortgages and verify that borrowers have income. This is one of the efforts taken as customer protection.