Dodd-Frank

Quick: What is the Dodd-Frank Act? What does the Dodd-Frank Act mean to you? How does it affect your daily life? Most people can’t even begin to answer those questions. Here a quick rundown of the Dodd-Frank Act:

Otherwise known as the “Financial Stability Act of 2010”, it was signed into law on July 21, 2010 by President Obama. It was championed by Barney Frank starting in 2009. The purpose of the Act is:

To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ``too big to fail'', to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.

It is clear that this act, written in the midst of a financial emergency, is clear that the government has a clear interest in making sure that the county’s banks don’t go broke again and that those in the financial community have to control their behavior as well. It brings protections to the average American whose retirement portfolio or even defined retirement benefits plans have a stake in the stock market and banks.

In short almost every American has a protection on some level or another within the Dodd-Frank Act. On the other hand, what is protection is also a limit on success. Experts have identified key areas that have to be modified in order to not hinder success.

President Trump and Congress are now charged with the task of modifying this Act. Some have called to ease requirements on small and mid-sized banks. There is also the “fiduciary-rule”, that requires stock brokers to put their clients’ interests ahead of their own, which in the legal community makes perfect sense. On the other hand, it would greatly limit what brokers can invest client’s money in.

It will be interesting to see, but the action taken will not be a complete overturn or repeal of this Act, but rather shoring up what it’s weaknesses and eliminating provisions that are not necessary.