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The Pros And Cons Of The Dodd-Frank Act

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The Dodd-Frank act is an important part of the financial industry over the last 10 years. The act has introduced regulation that helps to look over and monitor banks and financial companies to help protect customer’s investments following the financial crisis. The Dodd-Frank Act was introduced and passed by Congress in 2010 to help protect consumers, regulate finance, and prevent major financial disasters. (Liu) The bill was implemented to help customers and protect markets, but it has many critiques. Members of Congress and the federal and local government have been weary of the bill saying it goes too far to regulate finance. As many of the critiques come from only one political party, others say the bill hasn’t gone far enough as many deadlines …show more content…

(111th United States Congress) However, the Dodd-Frank Act has overstepped in many ways. First and foremost in the form of too much regulation. Many financial and economic experts have pushed to scale back on the many of the Dodd-Frank regulations. Most recent being Chairwoman Janet Yellen of the Federal Reserve. Her sentiments echoed that we must make sure regulations are not overly burdensome on banks of all sizes. (Torry) Moreover, the bill limits business invest and innovation. The act limits the amount capital reserves allowed to be held, in addition to putting too many rules on who can be lent to and what amounts and rates the lending can be done at. (De Lea) Dodd-Frank also added regulations that impacted stock exchanges, even though no exchange had a single contribution to the financial crisis. (Clinton) International financial transactions have also suffered under this bill as it failed to align international regulations with its proposed and enacted ones, this has caused finance with other countries to slow down. (Clinton) The issues with Dodd-Frank have been highlighted recently with the passage of the Financial Choice Act, a repeal bill for …show more content…

Making financers have skin in the game means they would more responsibly loan and set more appropriate rates and collection practices. This would benefit both consumers and financial institutions. Financial institutions would then become more competitive in order to attract more customers while putting skin the game. This also lowers risk for firms as more people will be willing to take out loans and gives them more financial

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