What is the Dodd-Frank Act?
The Dodd-Frank Wall Street Reform and Consumer Protection Act, was signed into effect by former President Barack Obama in 2010 as a measure to curb the practices that resulted in the 2008 global financial crisis. The Act, which gets it name from the then Financial Services Committee Chairman Barney Frank and ex-Chairman Chris Dodd of the Senate Banking Committee, regulates financial markets and enforces consumer protection among other things.
How does it help?
Dodd-Frank Act brought reforms and regulations to swaps, after the credit default swaps were widely held responsible for precipitating the 2008 financial crisis. Dodd-Frank created the Consumer Financial Protection Bureau to regulate functioning of banks and provide truthful information about mortgages and financial services, besides help control corruption in financial industries.
However, the law was widely criticised for limiting the profit-making ability of the financial firms.
Why is it in the news now?
In February 2017, U.S. President Donald Trump issued an order asking regulators to review the Act and look for legislative reforms. Following this, Republicans in the U.S. House of Representatives, on May 4, pushed forward major legislative reforms that would lift the restrictions that the Act placed on financial institutions.
The reforms would repeal about 40 provisions of the Dodd-Frank Act.
Republicans argued that the law is slowing the economic growth because of cost compliance and restriction in lending.
