banks safer in order to protect Americans.Ĭhris Dodd, a Democratic Senator for Connecticut, and Barney Frank, a Democratic representative for Massachusetts, worked together to create the Dodd-Frank Act: a bill that put stricter requirements on the banks.įrank called it the “toughest financial reform and regulation since the New Deal.” “We were fighting an ongoing set of practices, and if we didn’t put an end to them, they would have kept going,” he said.ĭodd added, “What we tried to do with the bill is not eliminate future crises - they are going to happen - but create tools. In the aftermath of the 2007-2008 financial crisis, two Congressmen came up with a law to make U.S. Rollbacks: The biggest legal change to the law occurred earlier this year, when President Donald Trump signed a bill loosening restrictions on banks smaller than $250 billion in assets.These institutions won't have to undergo stress tests, which regulators use to measure their ability to withstand an economic crisis. And there are arguments that it doesn’t apply enough oversight over “shadow banking” (think hedge funds and investment banks.) Meanwhile, those in the banking industry and the political right say Dodd-Frank has too many regulations. Elizabeth Warren, say the law wasn’t tough enough, and that it left a lot of enforcement up to the discretion of regulators. The act also authorized the creation of the Consumer Financial Protection Bureau (now also known as the Bureau of Consumer Financial Protection) which collects complaints about financial services like student loans and banking, and has the power to hit these financial companies with fines if they are found to engage in unfair practices.Ĭriticisms: Some people on the political left, like Sen. It requires them to have more capital on hand to reduce the risk from bad loans, and it limits their proprietary trading. What was it supposed to do? In the aftermath of the ‘07-’08 financial crisis, Dodd and Frank designed the bill to make the banks safer. The key players were: Chris Dodd, who served as a Democratic senator for Connecticut from 1981-2011, and Barney Frank, a Democratic representative for the state of Massachusetts who served from 1981 to 2013. The Dodd-Frank Act Fully known as the Dodd-Frank Wall Street Reform and Consumer Protection Act | Signed into law by President Barack Obama on July 21, 2010.
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