The Dodd-Frank Wall Street Reform and Consumer Act, also known as the Dodd-Frank Act, is an act that was created in 2010 by the Obama Administration. This act was a response to the financial crisis of 2008. It was named after two U.S. senators who worked on the legislation to create over 2,300 pages of reforms that would take place over a number of years. The act addresses the risks of the U.S. financial system and aims to reduce or eliminate them completely.
In 2018, the House of Representatives voted to roll back a number of pieces from this act.
What is the importance of the Dodd-Frank Act?
The Dodd-Frank Act monitors the stability of major firms that were once considered too large to fail. It creates ways for liquidation and restructuring to take place and helps prevent tax dollars from being needed to support these companies.
The act also helped stabilize the Consumer Financial Protection Bureau’s ability to prevent predatory mortgage lending, which was the underlying cause of the 2008 recession.
This act also strengthened the whistleblower program. It created a mandatory bounty program, which meant that those who reported on the negative behaviors of a company could receive up to 30 percent of the proceeds from a settlement following litigation.
The criticism of this act comes down to the impact it has on business itself. While it does protect consumers, it makes it harder for financial firms to make profits. Those who do not support the bill believe that it takes away the U.S. firms’ ability to be competitive with foreign counterparts. It is also believed by critics that the act will ultimately hurt the ability of the economy to grow, further harming the United States.
What was rolled back in 2018?
In 2018, changes eased regulations on small and regional banks. It also exempted escrow requirements for residential mortgage loans when they were held by depositories or credit unions who met certain conditions. Lenders with assets under $10 billion dollars are exempt from the Volcker rule as a result of the changes. Additionally, the bill proposed free credit security freezes for consumers.
This act has a major impact on how people are treated as whistleblowers and dictates new regulations for some businesses. It’s important to understand where you stand if you are a business owner or someone who wants to blow the whistle on fraud in the workplace.