The Dodd-Frank Wall Street Reform and Consumer Protection Act
In July, the U.S. Senate passed and President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”), a 2,000 page bill containing what may be the most sweeping financial reforms since the Great Depression.
The Act itself proclaims that it is “An Act 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.” With these goals in mind, the Act sets forth major overhauls of virtually every aspect of business, from the regulation of swaps, derivatives, and hedge funds to the fiduciary duties of brokers to executive compensation to the creation of the Bureau of Consumer Financial Protection and the Financial Stability Oversight Council, and more.
The task now facing the business and legal communities is a daunting one: to delve into the substance of the Act and come to understand the subtleties and nuances this new law, to find a way to transact business within the confines of these new regulations.
What this all means for the finance industry is unclear. On one hand, there is no doubt that the market hates uncertainty. It can be hoped that the certainty brought to the economic landscape by the passage of the Act will lead to greater stability and long-term growth. On the other hand, the complexity of the legislation and the new requirements of the Act may deter businesses from participating in the financing transactions that are so important to the movement of money within our economy. In either circumstance, the latter part of 2010 should be an interesting time for investors, attorneys, and Wall Street financiers alike.
