The Dodd-Frank Act: America's Post-Crisis Financial Reform Law
Dodd-Frank (2010) was the US response to the 2008 financial crisis — creating the CFPB, the Volcker Rule, derivatives regulation, and stress testing for large banks.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) was the United States' primary legislative response to the The Global Financial Crisis (2007-2009): How Subprime Mortgages Crashed the World Economy. ## Key Provisions - **Consumer Financial Protection Bureau** (CFPB): A dedicated federal agency for consumer financial products — mortgages, credit cards, student loans - **Volcker Rule**: Restricts deposit-taking banks from proprietary trading (betting with their own money) - **Derivatives regulation**: Mandatory central clearing and reporting for over-the-counter derivatives, addressing the opacity that amplified the Collateralized Debt Obligations: The Structured Finance Instrument That Blew Up the World Economy crisis - **Stress testing**: Annual Federal Reserve stress tests for large banks to assess capital adequacy under crisis scenarios - **Orderly Liquidation Authority**: Framework to wind down failing systemically important institutions without taxpayer bailouts - **Financial Stability Oversight Council** (FSOC): Identifies emerging systemic risks ## Partial Rollback The 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act raised the "systemically important" threshold from $50 billion to $250 billion in assets, exempting mid-size banks from the strictest requirements — a change some critics linked to subsequent bank failures like Silicon Valley Bank (2023).