Eastern Kentucky University
The Dodd-Frank Act: Policy Analysis
Institution
Eastern Kentucky University
Faculty Advisor/ Mentor
Frank O'Connor
Abstract
During 2007-2009 the United States experienced a financial crisis that plunged the country into a deep recession where 8.8 million jobs were lost and $19.2 trillion in household wealth disappeared. Studies estimate the losses of the financial crisis based on lost output are as high as $14 trillion, a whole year’s worth of gross domestic product. In the wake of this crisis it became apparent that the framework of the financial regulatory system needed significant restructuring. The government responded with the “The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010” in order to restore market and consumer confidence. The purpose of this paper is to provide an analysis and explanation of the sweeping regulatory reform legislation known as the Dodd-Frank Act in order to determine whether the act can accomplish its goals to deliver financial stability to the overall economy. Examining past market and government failures that contributed to the financial crisis, and those that remain as a hindrance to future economic stability suggests that the act may well fail—mainly due to its slow and arduous implementation process. As of October 1, 2014 only 220 (55.3%) of the 398 required rulemaking has been finalized. Delays in the implementation of the act continue to expose the economy to the very dangers the Dodd-Frank Act is supposed to prevent.
The Dodd-Frank Act: Policy Analysis
During 2007-2009 the United States experienced a financial crisis that plunged the country into a deep recession where 8.8 million jobs were lost and $19.2 trillion in household wealth disappeared. Studies estimate the losses of the financial crisis based on lost output are as high as $14 trillion, a whole year’s worth of gross domestic product. In the wake of this crisis it became apparent that the framework of the financial regulatory system needed significant restructuring. The government responded with the “The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010” in order to restore market and consumer confidence. The purpose of this paper is to provide an analysis and explanation of the sweeping regulatory reform legislation known as the Dodd-Frank Act in order to determine whether the act can accomplish its goals to deliver financial stability to the overall economy. Examining past market and government failures that contributed to the financial crisis, and those that remain as a hindrance to future economic stability suggests that the act may well fail—mainly due to its slow and arduous implementation process. As of October 1, 2014 only 220 (55.3%) of the 398 required rulemaking has been finalized. Delays in the implementation of the act continue to expose the economy to the very dangers the Dodd-Frank Act is supposed to prevent.