What is The Dodd-Frank Act?
The Dodd-Frank Act of 2010, also known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, comprises 2,000 pages of federal rules and regulations for financial institutions and their customers. Named after its Democratic sponsors, US Senator Christopher J. Dodd and US Representative Barney Frank, Dodd-Frank was passed in July of 2010 as a means of preventing the events that triggered the 2008 financial crisis from happening again.
The largest financial regulation revamp of its kind since the Great Depression, Dodd-Frank led to the creation of a number of new government bodies, including a Consumer Financial Protection Bureau (CFPB) to protect retail customers from predatory mortgage lending and reduce incentives for mortgage brokers to get home buyers to take on more costly loans. The CFPB now requires loan terms to be communicated in an easy-to-understand, simplified format.
Dodd-Frank has also spawned the Financial Stability Oversight Council, charged with keeping an eye out for potential threats to the financial system. It also created the Orderly Liquidation Authority, which was set up to facilitate the liquidation or restructuring of a large financial company that’s close to failing and thereby preventing a far-reaching economic collapse.
The Dodd-Frank Act also makes it mandatory for companies active in the oil, gas and minerals industries, that file forms annual reports with the Security and Exchange Commission (SEC), to report all payments made to governments on Form SD.