Dodd Frank Wall Street Reform Analysis

A Critical Analysis of the Dodd-Frank Wall Street Reform & Consumer Protection Act

Before the official passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, America had gone years without accountability for Wall Street and other large banks. Our country suffered its worst financial crisis since the Great Depression due to this failure to hold these banks liable for their actions. Businesses failed, the housing market crashed, personal savings were wiped out, and millions of jobs were lost. These are just a few of the repercussions that America suffered due to the financial crisis of 2007-2008. The passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act helped reestablish confidence
It is then much easier to analyze the value of those assets. An important aspect contributing to securitization is the “skin in the game” situation. It is referred to as a type of situation where high-ranking insiders use their own money to buy stock in the company that they are currently running (Krawczyk, 2010). This imposed problems for the United States during the financial crisis. The Dodd-Frank Wall Street Reform and Consumer Protection Act now requires that companies who sell products such as mortgage-backed securities to retain at least 5% of the credit risk (Krawczyk, 2010). The reasoning behind this requirement is so that in a situation where an investment does not pan out to what it was expected, the company would lose out along with the people they sold it to. This way, consumers will not be the only ones suffering losses on mortgage and asset-backed securities. Along with the reduction of risks imposed by securities, the Dodd-Frank Wall Street Reform also amplified its oversight of the municipal securities industry. The Municipal Securities Rulemaking Board now puts investors first. The board must ensure that the public interest is better protected within the regulation of municipal securities. It also imposes a fiduciary obligation on advisors to ensure that they adhere to standards of caution and
The goal of the Dodd-Frank Wall Street Reform was to raise standards and regulations relating to hedge funds. Increased state supervision was crucial in order to allow the Securities and Exchange Commission (SEC) to focus its efforts on newly registered hedge funds instead of dwelling on past ones that have been proven to be illiquid (Acharya, 2013). A way that this section on hedge funds has helped with assessing systematic risks is by requiring advisors to register with the SEC as investment advisers. They must also provide information about their portfolios and trades to be shared with the systematic risk regulator. The SEC is then able to report to Congress on an annual basis on how this data is being used to protect