Dodd-Frank Wall Street Reform and Consumer Protection Act

On July 21, 2010 the President of the United States, Barack Obama, signed into law some of the most sweeping legislation with regard to the financial markets since the Great Depression.  The question is, will this be enough? The Dodd-Frank Wall Street Reform and Consumer Protection Act, (“Dodd-Frank Act,”) creates more questions than it answers.

It has been over 70 years since the first set of comprehensive rules known as the Securities Acts of 33 and 34 were established.  According to historian David Kennedy, the Securities Acts have improved economic efficiency by making large amounts of information available to the investing public.[i] Once reforms are put into place they are often met by resistance from the industry, as nobody wants additional compliance burden.  The Dodd-Frank Act is no different in that a number of industry professionals have raised questions about this law.  In addition, the Securities Act of 34 created the Securities and Exchange Commission and the Dodd-Frank Act has created the Consumer Protection Agency.  When the Securities and Exchange Commission was created it was given broad powers to regulate the financial services industry and it is anticipated that the Consumer Protection Agency will also be granted such broad powers to regulate the financial services industry.  After the dust settles on Wall Street, will we look to the Dodd-Frank Act as we do the Securities Acts of 33 and 34?

Over the next several months we will attempt to break down the components that make up the Dodd-Frank Act and provide some real world solutions to the questions that this law will evoke.  For further information regarding H.R. 4173: Dodd-Frank Wall Street Reform and Consumer Protection Act please visit:  http://www.govtrack.us/congress/bill.xpd?bill=h111-4173


[i] Kennedy, David, Freedom From Fear, Oxford: New York, 1999.

Will the party ever end?

With the national jobless rates hovering around 9.6% some financial firms continue to throw lavish parties for top traders and sales persons amid layoffs.  Fox Business News reported that Bank of America will be slashing up to 5% of its employees in the capital markets division but will be holding a swanky party at 230 Fifth Avenue, a rooftop bar that was rated among one of the best rooftop bars in New York.[i]

It is amazing how some financial service firms will complain about the cost of regulation and continue to party like the financial crisis did not exist.  The financial services sector as a whole must recognize that it can no longer be “business as usual” and that they have the ethical responsibility to ensure adequate systems are in place to protect the individual investor.  In addition, these firms must take the moral high ground and exercise prudence when trying to reward the hard work of one group of individuals while laying off another group of individuals.


[i] Charlie Gasparino & Sital Patel, FOXBusiness, Published September 23, 2010

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