...Guohui Huang ACCT 431-Fall 2014 09/19/2014 Dodd-Frank Act The Dodd-Frank Act, also known as the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Dodd-Frank Act was introduced in the House of Representatives by Financial Services Committee Chairman Barney Frank, and by the Senate Banking Committee former Chairman Chris Dodd and therefor named after the two men. The Dodd-Frank represents the most comprehensive financial regulatory reform measures taken since the Great Depression; it was initiated in response to the devastating Financial Crisis of 2007-2008. In simplest terms, the Dodd-Frank Act is a law that places major regulations on the financial industry. In general, the 2,300-page act covers virtually every aspect of the financial services and banking industries. The Act imposed restrictions and reforms upon the industries that had previously been lacking of any substantial regulations. In 2010, President Barack Obama signed the Dodd-Frank Act in to Law to help secure the future economy of the U.S. However, before the official passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, America had gone years without accountability for Wall Street and other large banks. The country suffered its worst financial crisis since the Great Depression due to this failure to hold these banks liable for their actions. Businesses failed, the housing market crashed, personal savings were wiped out, and millions of jobs were lost. There are just...
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...Dodd-Frank Act: Did it Work? Introduction “With the President’s signature, the [Dodd-Frank Act] will mark the greatest legislative change to financial supervision since the 1930s,” according to Margaret Tahyar, partner and member of the New York Financial Institutions Group (Tahyar). Officially signed by Barack Obama on July 21, 2010, the Dodd-Frank Act gave positive hope for the future for financial markets and institutions, being viewed as the “most comprehensive financial reform since the Glass-Steagall Act” (Amadeo). However, since the implementation of the bill, various differing opinions on whether the passing of the act has truly helped or hindered the overall financial economy have prevailed. Dodd-Frank Act Overview Officially signed as the Dodd-Frank Wall Street Reform and Consumer Protection Act, the bill was implemented to change and supervise all financial institutions. More commonly referred to as the Dodd-Frank Act, named after the two legislators who proposed it, Senator Chris Dodd and Congressman Barney Frank, the act was created in result of the Great Recession of 2008 and to rein in large Wall Street companies that contributed to the crisis in order to prevent future devastations (Peirce, Robinson and Stratmann). As of 2014, only a third of the nearly 400 required rules had been finalized and only one third had been proposed (Culp). Kimber Amadeo, a US Economy Expert, provides the eight major regulation changes that were brought about from the...
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...Dodd-Frank Act and The Consumer Protection Agency. Finance 5000 Webster University Mr. Smith Patrick Overby Overby41@gmail.com/ 915-540-1267 Spring 2 2015 INTRODUCTION The Wall Street Reform and Consumer Protection Act or the Dodd-Frank Act was signed into law in 2010 due the financial collapse of the economy. It provided regulatory protection for the consumer and oversight on how banks issued loans. It provided a blueprint for how to approach to resolving the challenges that the financial markets can create. The framework of the law resembles The New Deal in the 1930s because of the Great Depression. The reforms implemented by the Dodd-Frank Act will have far-reaching effects on the financial system and our economy. The Dodd-Frank Act allows company stockholder to determine the type of compensation packages of that management receive. Businesses must create a committee to assess and decide the amount awarded to their leaders. There are myriad of viewpoints towards Dodd-Frank from the detractors and proponent of the law. Individuals who are against the law believe that it is inflexible and will hurt businesses. The supporters of the law understand that this will limit the power of the financial institution. Dodd-Frank Act In 2008, the country was going through one of the worst financial crisis in history that resembled the Great Depression of the 1930’s. It not only affected the U.S. but also threatened the total collapse of large financial institutions...
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...Dodd-Frank Act: Did it Work? Introduction “With the President’s signature, the [Dodd-Frank Act] will mark the greatest legislative change to financial supervision since the 1930s,” according to Margaret Tahyar, partner and member of the New York Financial Institutions Group (Tahyar). Officially signed by Barack Obama on July 21, 2010, the Dodd-Frank Act gave positive hope for the future for financial markets and institutions, being viewed as the “most comprehensive financial reform since the Glass-Steagall Act” (Amadeo). However, since the implementation of the bill, various differing opinions on whether the passing of the act has truly helped or hindered the overall financial economy have prevailed. Dodd-Frank Act Overview Officially signed as the Dodd-Frank Wall Street Reform and Consumer Protection Act, the bill was implemented to change and supervise all financial institutions. More commonly referred to as the Dodd-Frank Act, named after the two legislators who proposed it, Senator Chris Dodd and Congressman Barney Frank, the act was created in result of the Great Recession of 2008 and to rein in large Wall Street companies that contributed to the crisis in order to prevent future devastations (Peirce, Robinson and Stratmann). As of 2014, only a third of the nearly 400 required rules had been finalized and only one third had been proposed (Culp). Kimber Amadeo, a US Economy Expert, provides the eight major regulation changes that were brought about from the Dodd-Frank...
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...repeating itself. The only question was what to do. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), signed into law by President Barack Obama on July 21, 2010, was the proposed answer. The act was the work of Representative Barney Frank (D-MA), Chairman of the Financial Services Committee and Senator Chris Dodd (D-CT), Chairman of the Senate Banking Committee. The purpose of the legislation is “to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end “too big to fail,” to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes” (The Dodd-Frank Wall Street Reform and Consumer Protection Act, 2012). While the law officially made it easier for whistleblowers to alert authorities to fraud, the law itself can be seen as unprogressive, rather than progressive, or forward thinking. According to the Association of Certified Fraud Examiners, fraud can cost an average company five percent of their annual revenues, which makes the detection of such fraud a priority for all stakeholders (Brink, Lowe & Victoravich, 2013). Prior to the Dodd-Frank Act, employees could only report instances of fraud internally, which triggered an organization to investigate the tip. This could potentially cause a conflict of interest. An advantage of the Dodd-Frank Act was the Whistleblower Rule, which aimed to improve...
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...The full name of the bill is the Dodd-Frank Wall Street Reform and Consumer Protection Act, but it is better known and most often referred to as Dodd-Frank. The Act was signed into Federal law President Barack Obama on July 27, 2010 as a prompt response to the Great Recession of 2008. Initially proposed amid the wake of the Great Recession of 2008, the bill’s fundamental intention is to prevent another collapse of a major financial institution like Lehman Brothers. In a word, Dodd-Frank is a comprehensive and complicated piece of financial regulation that places pivotal regulations on the financial industry; such regulations would have tremendous effects on all federal financial regulatory agencies. The bill consists of about 16 major reform propositions and contains hundreds of pages, however, we will only focus on major rules of regulation....
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...of America’s economy, the Sarbanes-Oxley act and the Dodd-Frank act have attempted to reinforce and uphold the single most important virtue that our capitalist society so desperately depends on, trust. Many of the following names are familiar to us all by now, and for the wrong reasons: Enron, Lehman Brothers, World-Com, and Tyco. So what have SOX and DOD actually accomplished for our capitalist society? What can they actually do to help avert such catastrophic situations in the future? Let us begin with the Sarbanes-Oxley Act. Under the watchful eye of the Securities Exchange Commission the Sarbanes-Oxley act strives to protect the investing public from fraudulent and erroneous accounting practices, in addition to improving the accuracy of public financial statements. The act has transformed the world of accounting by: creating the PCAOB (Title I), increasing an auditor’s independence (Title II), increasing the responsibility/liability of a company’s senior management (Title III), enhanced financial statement disclosure requirements (Title IV), eliminating analyst conflicts of interest (Section V), increasing corporate and criminal fraud accountability (Section VIII), enhancing white–collar crime penalties (Title IX), increasing the responsibility/liability for corporate tax returns (Title X), and increasing the responsibility for corporate fraud and accountability (Title XI). There are several more provisions that comprise the act, but those mentioned are the “heavy hitters”...
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...11-8-2011 Financial Markets & Inst Dodd-Frank Assignment The Dodd Frank Act has been created as a regulatory reaction from the recent financial crisis. The magnitude of its implications and provisions has not been seen since the great depression and will be conducted as a major overhaul to the financial systems rules. Financial regulation within a system that clearly had ulterior motives and lacked market discipline is inevitable. Without clear transparency of what and how borrowers are investing individuals savings will surely lead to moral hazard and conflicting interests. With Dodd Frank hopefully some of this asymmetric information will be largely more apparent to an inspecting investor. This Act aims to promote the financial stability of the United States financial system by implementing rules and regulations to improve accountability and transparency. Dodd Frank mainly addresses issues dealing with ending the "too big to fail" banks, protecting the American taxpayer by ending bailouts, ensuring consumers safety from abusive financial services practices, and for other related purposes. The legislation gives the government more power to step in and "unwind" financial firms that are failing, enables more oversight of the derivatives market, and to protect the individual investor (Bentley). Thanks to Dodd-Frank, we will see whistleblowers offered incentives for reporting compliance violations to a larger and more powerful SEC. The SEC will also have the power to impose...
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...any kind of danger to the public or the environment. Whistle-blowing can be internal or external. The whistle blowers are often well educated people holding professional positions and are altruistically motivated. They allow themselves to be guided by their own attitudes and hold utilitarian beliefs. However, in case of being found out, the effects can be vastly debilitating for them including losing the job, isolation and personal life being put in jeopardy. The Dodd Frank law provides the whistle blowers protection from retaliation from the companies. If companies retaliate to whistle blowing the employees reporting wrong doing are protected by the Dodd Frank's anti retaliation statute and liable for double back pay (Miceli, et. al. 1984). Introduction Recently, a case of whistle blowing had come to light in September last year when Khaled Asadi filed a complaint that G.E. Energy (USA) violated the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. He alleged that he had been terminated after making an internal report of a possible securities law violation. Asadi had accepted GE energy's offer in 2006 to be its s its Iraq Country Executive and relocated to Amman, Jordan. While serving in this position, Asadi came to know that GE Energy had hired a woman closely associated with a senior Iraqi official to win his favor for negotiating a lucrative joint venture...
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...The Dodd-Frank Act is a legislation passed as a response to the financial crisis in 2008. It is intended to decrease various risks in the U.S. financial system. Some things it tried to create were the ability to grow jobs, protect consumers and prevent another financial crisis. It was made to restore faith in our financial system and to give Americans confidence that we will figure this crisis out and prevent another one the best we can. The act has established numerous new government agencies to oversee various components of the act. The Financial Stability Oversight Council is supposed to monitor the financial industry as a whole especially on Wall Street. They monitor how stable major firms are and their financial documents. They do this with major firms who if they fail, could have a major negative impact on our economy (companies deemed "too big to fail"). If any of these banks are considered to be too large and could possibly pose a systemic risk, the council has the right to break up the banks. The Financial Stability Oversight Council established the Volcker Rule which prohibits banks from owning or using hedge funds to increase profits. Next they made the The Consumer Financial Protection Bureau. The Consumer Financial Protection Bureau is in charge of credit and debit card companies and mortgage loans. This council is in place to make it easier for consumers to understand the regulations of mortgages. They make sure everyone is alert and clear of accurate...
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...The Rise and Fall of Arthur Andersen LLP In October 2001, Enron was accused of overstating their earnings in the last few years in excess of $1 billion dollars (Doost, 2001). At the same time, Arthur Andersen, one of the most reputable auditing firms, was responsible for auditing Enron’s financial statements. The Security Exchange Commission (SEC) ordered Arthur Andersen to provide all relevant Enron documentation and auditing files. Going against Arthur Andersen’s impeccable reputation of honesty, David B. Duncan, the Arthur Andersen partner in charge of the Enron account, had his staff destroy thousands of pages of documents and records related to this case of fraud (Oppel & Eichenwald, 2002). Ultimately, the Supreme Court of the United States overturned Arthur Andersen’s conviction of "knowingly...corruptly persuading another person to withhold or alter documents in an official proceeding" (Wojdacz, 2009). However, Arthur Andersen had imploded and was not able to recover. Founder and His Principles Arthur Andersen was founded December 11, 1913. Arthur Andersen had a reputation of exemplary honesty. Arthur Andersen himself came from an immigrant Norwegian family. He worked for Price Waterhouse. At 23, Andersen became the youngest certified public accountant (CPA) in the state of Illinois by educating himself at night (Marotta & Selman, 2009). At this time, CPAs were trying to establish accounting as a profession. Marotta and Selman (2009) stated Integral...
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...enacted several laws designed to regulate financial institutions. One of these laws, the Banking Act of 1933, included four provisions limiting the ability of deposit-taking institutions to trade for their own benefit. These provisions are colloquially referred to as the Glass-Steagall Act. GlassSteagall forbade commercial banks from dealing, underwriting and investing in most securities. By the late 1990s, the resolve to enforce Glass-Steagall faded, shown particularly by the Fed’s blessing of the Citicorp/Travelers Group merger. In 1999, President Clinton signed the Gramm-Leach-Bliley Act into law, effectively repealing the Glass-Steagall Act. Echoing the political landscape following the Great Depression, the aftermath of the Great Recession saw a resurgence in grassroots campaigns to reinstitute tougher regulations on banks and financial institutions. The bailouts given to many large banks fueled this public outrage, especially in the light of the million Americans losing their homes to foreclosure. A recently inaugurated Obama administration sought to prevent a reoccurrence of the financial crisis by tightening government regulation of financial institutions. This eventually manifested itself as the Dodd-Frank Wall Street Reform and Consumer Protection Act. This act included several enhancements to bank regulation, going so far as creating a spiritual successor the to Glass-Steagall Act. The Volcker Rule, proposed by former Fed Chairman Paul Volcker, called for a separation between...
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...HAS HAPPENED In September 2008, the Bankruptcy of Lehman Brothers and the collapse of AIG, following the demise of Bear Stern and the near collapse of Merrill Lynch triggered a financial crisis. The result was a global recession which cost the World tens of trillion of dollars, rendered 30million people unemployed and doubled the national debt of the U.S. But this crisis was not an accident. It was caused by an out of control calamitous financial industry. In the aftermath of the Great Depression, the US enjoyed a 40 year economic growth without a single financial crisis. The Financial industry was tightly regulated. Critical to these regulations was The Banking Act of 1933, known as the Glass-Steagall Act, which separated commercial banking activities from Investment banking activities, meaning Banks with consumer deposits were prevented from engaging in risky investment banking activities. Most regular banks were regular businesses and they were prohibited from speculating with depositors’ savings. Investment banks, which handled stocks and bonds trading, were small private partnerships. In the 1980’s, the financial industry exploded. The Government, with support from Economists and Financial lobbyists started a 30 year period of financial deregulation. In 1982, the Government deregulated the Savings and Loans companies allowing them to make risky investments with depositors’ money. By the end of the decade, hundreds of Savings and Loans Companies had failed. This Crisis...
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...Analysis Paper The Consumer Financial Protection Bureau began operation in 2011, after the failures within investment banks, commercial banks and government sponsored housing enterprises caused a financial crisis. The crisis caused a collapse of capital markets related to consumer lending. The results of the crisis included unemployment rates at 10 percent, a decrease in home values by 40 percent or more, and a sharp decline in household savings. Although the crisis affected all Americans, those that were most negatively impacted included the Hispanic and African American communities. The losses felt by these minorities widened the gap in financial assets that bipartisan policies had been trying to reduce. The driving force behind the financial losses within these financially vulnerable communities was mortgage lending due to the fact that some lenders were sold subprime mortgages although they qualified for prime rates. After the financial crisis, congress determined that regulation practices among federal bank and financial product regulators, as well as the Federal Trade Commission (FTC) was ineffective because it lacked adequate oversight and enforcement mechanisms. In attempts to remedy this issue, congress enacted legislation creating the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). This Act reorganized the existing consumer financial protections into a new federal agency named the Consumer Financial Protection Bureau (CFPB), which...
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...Merrill-Lynch had been sold to Bank of America and AIG had just received a $85 billion dollar bail-out from United States taxpayers. The 158-year-old Lehman Brothers financial firm had just collapsed and filed for bankruptcy. It was an uncertain and extremely precarious time. The then President Bush asked for an astonishing 700 billion dollars to prevent a contagion from spreading through the financial markets and it was approved by Congress. So, what went wrong? How did our nation go from record surpluses in the late 90’s to the most devastating economic collapse since the Great Depression at the end of the Bush Administration? On that date October 23, 2008, these were the questions members of the Committee on Oversight & Government Committee Reform were asking at a hearing with Alan Greenspan (former Chairman of the Federal Reserve). During the hearing Mr. Greenspan made a surprising admission “ I made a mistake in presuming...
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