Dodd-Frank Wall Street Reform and Consumer Protection Act
Categories: Regulations, Tax
Remember that little thing that happened in 2008 that ruffled some people’s financial feathers? Okay, yeah, it wasn’t little at all...the financial crisis of 2008...which had all the horror of a great horror movie, but without any of the raw action of exorcisms or creepy-crawly-ghost-children.
The Dodd-Frank Wall Street Reform and Consumer Protection Act was legislation made to slap some reforms on the financial sector (in 2010, via the Obama administration). It’s a casual 2,300-ish pages that was designed to slowly roll out some checks and balances on the financial sector to do what the title says it’s supposed to do: reform Wall Street so they don’t screw over consumers again...because that wasn’t cool. And the government bailed out the banks, so what’s stopping them from doing it all over again if they’re thinking "It’s fine, you guys, we got bailed out last time, so we’ll get bailed out next time."?
But....the Trump administration voted to roll back key pieces of Dodd-Frank like it’s Walmart the week before Christmas. Dodd-Frank does things like draw some lines between the investment and commercial functions of banks to protect consumers, and restricting the activity banks can engage in, particularly the super-risky stuff. Dodd-Frank isn’t only designed to make sure banks aren't playing risky games with consumer money, but also to minimize conflicts of interest, which was a big part of the ‘08 crisis.
So...all that might be taken back...but it wouldn’t be the first time. There was this legislation called the Glass-Steagall Act in 1933, which separated commercial banks from investing business-things to protect consumers. Yeah, 1933...that’s right after the Great Depression, when about 5,000 banks failed and the economy fell apart. Glass-Steagall was repealed in 1999, which many argue allowed banks to do what they did that led to the ‘08 financial crisis. And then Dodd-Frank, a.k.a. Glass-Steagall 2.0 was born, and like Glass-Steagall 1.0, it's getting torn down. And ‘round and 'round we go.
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Finance: What is Regulation Full Disclos...43 Views
finance a la shmoop. what is regulation full disclosure or in industry parlance
reg FD ?all those whispery hallways of the 1970s and 80s
insiders muckety-mucks cheaters Liars deceivers key employees on the take [men in suits discuss stocks]
sound like the dramatic cover for a Hollywood movie and while it was and it
was real life as well. the practice of gleaning information
essentially unavailable to the average investor was a large part of the
practice of quote doing research unquote for all too many of the professional by
side investment firms of the era. the regulator's finally noticed and began to
crack down with only modest success for a while when finally reg FD was enacted
via the SEC in 2000. well that regulation massively prohibited the type of
discussions that could legally happen among analysts and company insiders. in
fact disclosure of much more than much more than the company name mailing
address and the product they sold was prohibited unless it was done in a
broadly available and well-publicized public forum that John Q public could [woman gives presentation]
participate in. the goal here was to take away free money or profits or gains from
insiders leaking information you know so that investors could make bets with way
more information on whether or not the roulette wheel of the company's
quarterly performance in earnings was going to in fact land on red twenty
three. so yeah that's what reg FD is about. trust us we've fully disclosed
everything we know about it and we're going modern here. modern era people come
on get with it. [man folds arms inside casino]