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Dodd-Frank Act of 2010

In: Business and Management

Submitted By kevn1195
Words 1093
Pages 5
Kevin Patel
Intermediate Accounting I
Professor Stubbs

Topical Paper 2: Dodd-Frank Act of 2010 In 2008, when the financial crisis occurred, millions of Americans were left without jobs and trillions of dollars of wealth was lost wealth. To make sure the Great Recession would not happen again, President Barrack Obama put into effect the Dodd- Frank Act. With the help of this law, banks will not be able to take irresponsible risks that had negative effects on the American people. Furthermore, with the Volcker Rule embedded into the act, it will ensure that banks are no longer allowed to own, invest, or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit, unrelated to serving their customers. The government will monitor banking activities through the use of the newly created Financial Stability Oversight Council that will work with the Office of Financial Research to use its resources and authority to investigate any it sees fit (CroweHorwath). Additionally, the act creates an instrument for government to shut down failing financially institutions without it creating a financial panic that leaves American taxpayers on the hook for the risky activities done by others. The act promotes market discipline that eliminates the expectation that the government will be there to bail them out in the situation where they fail. As it can be seen by the key provisions of the Dodd-Frank Act, its main purpose is to protect American families from having to go through the Great Recession, which we still currently are in, even after seven years and making sure that the market is no longer unmonitored, which is one of the weakness the act is intended to cure. The Dodd-Frank Act was created on the simple principals that regulation must be applied consistently, institutions should bear the risk not taxpayers, and regulatory figures...

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