{ "id": "R41350", "type": "CRS Report", "typeId": "REPORTS", "number": "R41350", "active": true, "source": "EveryCRSReport.com", "versions": [ { "source": "EveryCRSReport.com", "id": 579792, "date": "2017-04-21", "retrieved": "2018-10-08T20:51:44.552997", "title": "The Dodd-Frank Wall Street Reform and Consumer Protection Act: Background and Summary", "summary": "Beginning in 2007, U.S. financial conditions deteriorated, leading to the near-collapse of the U.S. financial system in September 2008. Major commercial banks, insurers, government-sponsored enterprises, and investment banks either failed or required hundreds of billions in federal support to continue functioning. Households were hit hard by drops in the prices of real estate and financial assets, and by a sharp rise in unemployment. Congress responded to the crisis by enacting the most comprehensive financial reform legislation since the 1930s.\nThen-Treasury Secretary Timothy Geithner issued a reform plan in the summer of 2009 that served as a template for legislation in both the House and Senate. After significant congressional revisions, President Obama signed H.R. 4173, now titled the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203), into law on July 21, 2010.\nPerhaps the major issue in the financial reform legislation was how to address the systemic fragility revealed by the crisis. The Dodd-Frank Act created a new regulatory umbrella group chaired by the Treasury Secretary\u2014the Financial Stability Oversight Council (FSOC)\u2014with authority to designate certain financial firms as systemically important and subjecting them and all banks with more than $50 billion in assets to heightened prudential regulation. Financial firms were also subjected to a special resolution process (called \u201cOrderly Liquidation Authority\u201d) similar to that used in the past to address failing depository institutions following a finding that their failure would pose systemic risk.\nThe Dodd-Frank Act made other changes to the regulatory structure. It created the Office of Financial Research to support FSOC. The act consolidated consumer protection responsibilities in a new Bureau of Consumer Financial Protection (CFPB). It consolidated bank regulation by reassigning the Office of Thrift Supervision\u2019s (OTS\u2019s) responsibilities to the other banking regulators. A federal office was created to monitor insurance. The Federal Reserve\u2019s emergency authority was amended, and its activities were subjected to greater public disclosure and oversight by the Government Accountability Office (GAO).\nOther aspects of Dodd-Frank addressed particular sectors of the financial system or selected classes of market participants. Dodd-Frank required more derivatives to be cleared and traded through regulated exchanges, reporting for derivatives that remain in the over-the-counter market, and registration with appropriate regulators for certain derivatives dealers and large traders. Hedge funds were subject to new reporting and registration requirements. Credit rating agencies were subject to greater disclosure and legal liability provisions, and references to credit ratings were required to be removed from statute and regulation. Executive compensation and securitization reforms attempted to reduce incentives to take excessive risks. Securitizers were subject to risk retention requirements, popularly called \u201cskin in the game.\u201d It made changes to bank regulation to make bank failures less likely in the future, including prohibitions on certain forms of risky trading (known as the \u201cVolcker Rule\u201d). It created new mortgage standards in response to practices that caused problems in the foreclosure crisis. \nThis report reviews issues related to financial regulation and provides brief descriptions of major provisions of the Dodd-Frank Act, along with links to CRS products going in to greater depth on specific issues. It does not attempt to track the legislative debate in the 115th Congress.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R41350", "sha1": "b02ef75e360993cc7faf780d298b90f9d7a6c434", "filename": "files/20170421_R41350_b02ef75e360993cc7faf780d298b90f9d7a6c434.html", "images": { "/products/Getimages/?directory=R/html/R41350_files&id=/0.png": "files/20170421_R41350_images_775e2322b52e9006be9fa7c8988510a89850a52e.png", "/products/Getimages/?directory=R/html/R41350_files&id=/1.png": "files/20170421_R41350_images_d21bde1a3d268ba24b54ac56ac9cde4b25cdbd5a.png" } }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R41350", "sha1": "9a2da2c3d079cde2648a8cd3cd60b3a7b5e37edc", "filename": "files/20170421_R41350_9a2da2c3d079cde2648a8cd3cd60b3a7b5e37edc.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4898, "name": "Financial Market Regulation" } ] }, { "source": "EveryCRSReport.com", "id": 426037, "date": "2010-07-29", "retrieved": "2016-04-06T22:16:14.450116", "title": "The Dodd-Frank Wall Street Reform and Consumer Protection Act: Background and Summary", "summary": "Beginning in 2007, U.S. financial conditions deteriorated, leading to the near collapse of the U.S. financial system in September 2008. Major banks, insurers, government-sponsored enterprises, and investment banks either failed or required hundreds of billions in federal support to continue functioning. Households were hit hard by drops in the prices of real estate and financial assets, and by a sharp rise in unemployment. Congress responded to the crisis by enacting the most comprehensive financial reform legislation since the 1930s.\nTreasury Secretary Timothy Geithner issued a reform plan in the summer of 2009, which served as a template for legislation in both the House and Senate. House committees reported a number of bills on an issue-by-issue basis, which were then consolidated into a comprehensive bill, the Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173). H.R. 4173, as passed by the House on December 11, 2009, contained elements of H.R. 1728, H.R. 2571, H.R. 2609, H.R. 3126, H.R. 3269, H.R. 3817, H.R. 3818, H.R. 3890, and H.R. 3996. On May 20, 2010, the Senate passed H.R. 4173, after substituting the text of Senator Christopher Dodd\u2019s bill, the Restoring American Financial Stability Act of 2010 (S. 3217), as amended. Following a conference committee, the House accepted changes to H.R. 4173, now titled the Dodd-Frank Wall Street Reform and Consumer Protection Act, on June 30, 2010, and the Senate followed suit on July 15, 2010. President Obama signed the bill, now P.L. 111-203, on July 21, 2010.\nPerhaps the major issue in financial reform has been how to address the systemic fragility that was revealed by the crisis. The Dodd-Frank Act creates a new regulatory umbrella group chaired by the Treasury Secretary\u2014the Financial Stability Oversight Council\u2014with authority to designate certain financial firms as \u201csystemically significant\u201d and subjecting them to increased prudential regulation, including limits on leverage, heightened capital standards, and restrictions on certain forms of risky trading. These firms will also be subject to a special resolution process similar to that used in the past to address failing depository institutions.\nOther aspects of financial reform address particular sectors of the financial system or selected classes of market participants. The Dodd-Frank Act consolidates consumer protection responsibilities in a new Bureau of Consumer Financial Protection within the Federal Reserve. The act consolidates bank regulation by merging the Office of Thrift Supervision (OTS) into the Office of the Comptroller of the Currency (OCC). It requires more derivatives to be cleared and traded through regulated exchanges, and it mandates reporting for derivatives that remain in the over-the-counter market. Hedge funds have new reporting and registration requirements. Credit rating agencies are subject to greater disclosure and legal liability provisions, and references to credit ratings will be removed from statute and regulation. A federal office is created to collect insurance information. Executive compensation and securitization reforms attempt to reduce incentives to take excessive risks. Intermediaries who provide investment advice to retail investors and municipalities may be subject to a fiduciary duty. The Federal Reserve\u2019s emergency authority is amended and its activities are subject to greater public disclosure and oversight by the Government Accountability Office (GAO).\nThis report reviews issues related to financial regulation and provides brief descriptions of major provisions of the Dodd-Frank Act. This report will not be updated.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R41350", "sha1": "02794d08c4efe6b3255799845ce9bfbc2bdb5f1c", "filename": "files/20100729_R41350_02794d08c4efe6b3255799845ce9bfbc2bdb5f1c.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R41350", "sha1": "ad45864fd07aefa5ba48efa51e5590a890a9bd15", "filename": "files/20100729_R41350_ad45864fd07aefa5ba48efa51e5590a890a9bd15.pdf", "images": null } ], "topics": [ { "source": "IBCList", "id": 3451, "name": "Financial Market Regulation" }, { "source": "IBCList", "id": 562, "name": "Securities Regulation" } ] } ], "topics": [ "Domestic Social Policy", "Economic Policy" ] }