Dodd-Frank is the largest overhaul of the financial regulatory system since the Great Depression. It is 2,319-pages long, compared to Glass-Steagall (47 pages), Gramm-Leach-Bliley (145 pages), and Sarbanes-Oxley (66 pages). It will take financial institutions more than 58 million hours to file all the necessary paperwork — the equivalent of 29,000 full time employees working year round on compliance. It creates multiple new regulatory bodies in Washington costing taxpayers millions of dollars each year.
Dodd-Frank’s effects on the economy, industry, and consumers are far-reaching. AEI scholars Peter Wallison, Phil Swagel, Charlie Calomiris, and Alex Pollock, have been following implementation closely. Here is a collection of their work and other selected pieces on the topic.
Discover Dodd-Frank three years later Content
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The Dodd-Frank Act has failed to achieve its stated goals. Instead, evidence suggests that Dodd-Frank has reinforced investor’s perceptions that the largest financial institutions enjoy an extended government safety net. Rather than ending too-big-to-fail, Dodd-Frank’s provisions create new uncertainties around the resolution process for large financial institutions.
As implementation continues, it is increasingly clear that Dodd-Frank's unbalanced mix of new regulatory powers and vague goals are causing over-regulation and reducing economic growth.
Today marks the four-year anniversary of the Dodd-Frank Act. The financial regulatory bureaucracy has swelled to historic proportions and many of Dodd-Frank’s new rules are restricting credit and economic growth with questionable benefits to safety and soundness. So far, regulators have done little to consider the economic impact of their actions. But Congress soon may force them to.
Four years after it took effect, Dodd-Frank's pernicious effects have shown that the law's critics were, if anything, too kind. Dodd-Frank has already overwhelmed the regulatory system, stifled the financial industry and impaired economic growth.
Four years after the passage of Dodd-Frank, the severity of the crash and ensuing downturn continue to shape beliefs about financial and other key institutions, government regulation, and the gap between the rich and poor.
The Dodd-Frank Act (DFA) uses the phrase “systemic risk” 39 times without defining it. Because the term is ambiguous, the law allows the regulatory agencies wide discretion. The DFA directs agencies to draft and implement rules to control and minimize “systemic risk” without requiring the agencies to identify specifically what they are attempting to control or minimize.
The notorious Dodd-Frank Act set up the Financial Stability Oversight Council (FSOC), a committee of regulators, and tasked it with identifying and preventing the ill-defined threat of systemic risk. Join our keynote speakers and expert panelists as they address the fundamental problems created by these political constructs.