The SEC Office of Credit Ratings was charged with ensuring that agencies provide meaningful and reliable credit ratings of the entities they evaluate. Several financial-world notables argued that, while each institution is undoubtedly safer due to the capital constraints imposed by Dodd-Frank, the constraints also make for a more illiquid market overall.
The potential lack of liquidity due to the higher reserve requirements under Dodd-Frank means that banks must keep a higher percentage of their assets in cash, which decreases the amount they are able to hold in marketable securities. With banks unable to play the part of a market maker, prospective buyers are likely to have a harder time finding counteracting sellers. Commission on the Judiciary, House of Representatives.
Accessed Sept. Department of the Treasury. The White House. Consumer Financial Protection Bureau. Congressional Research Service. Federal Reserve History. Securities and Exchange Commission. The Wall Street Journal. Fiscal Policy. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.
At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Key Takeaways The Dodd-Frank Wall Street Reform and Consumer Protection Act targeted the sectors of the financial system that were believed to have caused the financial crisis, including banks, mortgage lenders, and credit rating agencies.
Critics of the law argue that the regulatory burdens it imposes could make United States firms less competitive than their foreign counterparts. Jeremy Stein, chairman of the department of economics at Harvard University, expressed disappointment during the webinar with how the law has been implemented more recently.
Former Federal Reserve Chair Janet Yellen expressed interest in implementing another broad regulatory reform in the future. The Dodd-Frank Act was a law passed in in response to the financial crisis of and established regulatory measures in the financial services industry. Dodd-Frank keeps consumers and the economy safe from risky behavior by insurance companies and banks. Over time, the law has been subject to scrutiny and loosening under the Trump administration, but lawmakers agree that the current financial environment due to COVID would be far worse without the preventative measures provided by the law.
Previously, I covered personal finance at other national web publications including Bankrate and The Penny Hoarder. When I'm not digging up the best ways to manage your money, I'm out traveling the world. Follow me on Twitter at keywordkelly. Select Region. United States. United Kingdom. Kelly Anne Smith. Forbes Advisor Staff.
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Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. Too many responsible American families have paid the price for an outdated regulatory system that failed to adequately oversee payday lenders, credit card companies, mortgage lenders, and others, allowing them to take advantage of consumers. Like a neighborhood cop on the beat, the CFPB supervises banks, credit unions, and other financial companies, and will enforce federal consumer financial laws.
For example:. The CFPB has launched a program called Know Before You Owe , an effort to combine two federally required mortgage disclosures into a single, simpler form that makes the costs and risks of the loan clear and allows consumers to comparison shop. For the first time, there is ongoing federal oversight of both nonbank companies and banks in the mortgage market to protect borrowers from unfair, deceptive or other illegal mortgage lending practices.
For families caught by unexpected overdraft fees: Many households have been automatically enrolled in expensive overdraft programs. These programs can hit consumers with costly overdraft fees for even the smallest purchases. The CFPB will enforce new rules that give consumers a real choice as to whether to join expensive overdraft programs so that they are not unknowingly charged unnecessary fees. President Obama signed the bill into law in May, Many of the most significant provisions of the law took effect in February, and are being enforced by the CFPB.
The law has two main purposes:. For families considering student loans: President Obama has asked his Administration to make sure students and families have the tools and relevant information that will help them make sound financial decisions in pursuing their higher education goals.
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