We have received numerous requests from our clients for a brief commentary and summary of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In theory, this legislation was meant to create a sound economic foundation to grow jobs, protect consumers, monitor and control Wall Street, end bailouts, prohibit any future “too big to fail” institutions, and prevent another financial crisis. Whether the law accomplishes these goals remains extremely controversial and open to debate.

Brief overview of the legislation

Independent Consumer Protection with Authority to Enforce: The law originally contemplated the creation of a new independent watchdog, based at the Federal Reserve, with the authority to ensure that American consumers are educated with accurate information to find mortgages, credit cards, and other financial products. The law also meant to protect consumers from hidden fees, abusive terms, and deceptive practices.

Avoid Future Bailouts for Lenders “Too Big to Fail”: The law was supposed to end the possibility that taxpayers will be required to bail out financial firms that threaten the economy. The law purports to create a process to liquidate failed financial institutions, impose rigid capital and leverage requirements to discourage institutions from getting too big, update the Federal Reserve’s authority, and establish rigorous standards and supervision to protect the American economy.

Check and Balance System: The statute also set out to create a governing body to identify and address systemic risks posed by large, complex companies, products, and activities before they threaten the stability of the economy.

Accountability: The law also suggests the elimination of loopholes that permit abusive practices commonly associated with hedge funds, mortgage brokers, and payday lenders.

Executive Compensation: The law provides shareholders with the ability to participate in corporate affairs with a non-binding vote on executive compensation and golden parachutes.

Investor Protection: The law further provides new rules for transparency and accountability for credit rating for agencies to protect investors and businesses.

Stricter Enforcement of Regulations: Finally, the law attempts to strengthen oversight and empower regulators to aggressively pursue financial fraud and manipulation of the system.


First, many Americans believe that the Dodd-Frank Act has not given regulators the power to allow big banks to fail, and in fact the biggest banks have become bigger than ever with no improvement in crisis management, and the practical regulation of these institutions has become more political than ever.

Second, Dodd-Frank rule promulgation and implementation has slowed to a crawl. The SEC’s establishment of sound rulemaking under the Act has slowed from an average of nine rules per month in the first year to an average of about five rules today. Moreover, most of the SEC’s rulemaking meetings have taken place behind closed doors, thereby obfuscating the so-called “transparency” that was supposed to result from the statute.

Third, economists criticize the law as not directed at people, but rather a guideline directed at bureaucrats to add more regulations and create more bureaucracies. The Dodd-Frank Act itself is approximately 1,000 pages long, and requires agencies to promulgate even more rules, making it impossibly complex.

Finally, the underlying theoretical benefits of the Act are outweighed by the practical lack of funding. The SEC’s lack of funding impairs any ability to bring large-scale enforcement actions against the armies of high-powered lawyers that large financial firms keep on retainer.

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The VanFleet Law Firm has a strong history in Commercial Litigation, Banking Law and General Business Law matters. Founded by Joseph VanFleet in 1998, the practice has grown and flourished over the years thanks to the talent, expertise and tenacity of the VanFleet legal team. Today, it provides counsel to a broad range of local, regional, national and international clients.

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