The Dodd-Frank Wall Street Reform And Consumer Protection Act
The economic crisis of 2008 deeply unsettled U.S. domestic policy, bringing several changes. U.S. governments have taken several measures to avoid such a situation again. Dodd-Frank Act, known as The Dodd-Frank Wall Street Reform and Consumer Protection Act, is one of these measures. It was created during the Obama administration in 2010.
This United State Federal law has allowed the financial sector to be regulated by the government. The law makes standards and oversight to protect the economy and American consumers, end taxpayers' and financial institutions' funding, ensure an advanced warning system in the economy's stability, improve rules on administrative fees and corporate governance, and eliminate loopholes that cause economic stagnation.
The Dodd-Frank wall street mortgage lenders were created as a reaction against financial activities that caused the 2008 financial crisis, such as falling stock prices and the investment banks. The Dodd-Frank Act aims to protect investors from risky behavior and ensure that financial practices that can be abused are eliminated. The Dodd-Frank law was admitted to financial resolutions coordinated by congress to protect consumers from large, unregulated banks.
Consumer Financial Protection Bureau(CFPB)
Dodd-Frank Act constituted the Consumer Financial Protection Bureau(CFPB). CFPB aimed to prevent mortgage lending and to ensure access to accurate information about mortgage terms. The CFPB may enforce consumer protection laws such as fines, rules, auditing individual financial companies, and so on. On the one hand, it has a consumer hotline where consumers can communicate around the clock to report financial services problems.
The Volcker Rule
Volcker rule is the main constituent of the Dodd-Frank Act. This rule limits the investments and speculative trading that banks and non-bank financial institutions can make. It prevents banks from engaging in activities that create conflicts of interest or expose the institution to high-risk trading strategies. The rule also aims to protect customer rights by avoiding regulations that contributed to the 2008 financial crisis and reducing the risk-taking rate by preventing banks from using their funds to increase profits.
