Dodd Frank Bill | A Cheat Sheet?

The Dodd Frank bill: USA’s solution to the 2007-2009 economic crises:

The Dodd Frank Bill mortgage was named after two great gentlemen – United States Senator Christopher J. Dodd and United States Representative Barney Frank. The Dodd -Frank Bill which is officially referred to as Wall Street Reform Act as well as Consumer Protection Act is a 2010 federal law Of the United States of America signed by the current president of the country Barrack Obama. According to this recent federal law of the US legislation, all the regulation of the financial industry is made the responsibility of the state. That is the financial regulation responsibility is reduced from the banks and shifted under the major control of the Government.

The Dodd Frank Bill text or Consumer production act of 2010 was passed as a consequence to the economic crisis that country was facing in the late first decade of the 21st century. The Dodd Frank Billis a set of rules and regulations passed by the legislation which are to be followed by the State banks. The act consists of regulatory processes which enforce accountability upon the banks towards the state.The bill was passed with the intention of avoiding the failure of key financial institutions again such as Lehman Brothers.

The regulatory reforms of the act are aimed to prevent any kind of economic crisis in the future. The act also targets low dependency on banks for starting up a company and to halt the process of any company which is investing more than it earns. The main purpose of the Dodd Frank Bill is to protect the money of the state by allowing it to regulate under the supervision of the state rather than the state banks.

The purpose and function of Dodd Frank Bill:

The 21st century brought with itself an economic downfall in the US. The crisis reached its peak in mid of the first decade and by 2007-2009 the country was officially declared as going through an economic crisis. People were becoming jobless due to lack of jobs, house prices were falling, many businesses were failing badly and more importantly the savings if the state were being emptied. The reason for it was evident: there were consumer protection laws, there was a high reliability on banks, and the financial regulation of the state was highly inconvenient and non regulation of the OTC market. Many people blamed solely the lack of consumer protection laws in the country while some blamed the financial regulations. In any case, these problems were evident and a solution was required to cope with the financial crisis and the Dodd Frank Bill was that solution.

dodd frank bill

The Dodd Frank Bill was passed in 2010 and as mentioned signed by President Obama. Under The Dodd Frank housing bill two councils were immediately created: the Financial Stability Oversight Council (FSOC) and Consumer Financial Protection Bureau (CFPB). The purpose of FSOC was to immediately address the issue of crisis to prevent further downfall. The council ordered banks to have funeral plans which meant that a company must be immediately shut down if its profits are falling and no further money should be issued to it. The council also keeps the activities of all the banks under surveillance and extreme scrutiny. CFPB was formed to pass laws for the consumer protection. The CFPB under the rights of the Dodd Frank housing bill further split the responsibility of watching consumer laws in various departments spread in different states of the country. The Dodd-Frank mortgage in short made things strict not only for the banks but for the consumers so that there was no illegitimate regulation and waste of money. The Dodd Frank Bill also protected consumers from false bank frauds.