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.