On July 21, 2010, President Obama signed into law a sweeping overhaul of U.S. financial regulations. The Dodd-Frank Wall Street Reform and Consumer Protection Act ended three decades of deregulation of financial markets and financial companies. It expands the authority of existing regulators, closes gaps in financial regulation and enhances corporate governance at all U.S. public companies.
The law takes aim at the casino culture on Wall Street that brought world financial markets to the brink of collapse in 2008 by subjecting a wider range of financial companies to government oversight and by bringing trading in over-the-counter (OTC) derivatives out of the shadows. The law requires most trading in these complex instruments to take place on exchanges and directs trades to be cleared centrally. A council of federal regulators, led by the Treasury secretary, is tasked with detecting and mitigating systemic risks to the financial system. Also new: a consumer financial protection bureau in the Federal Reserve. A summary of key provisions for investors can be found here.
As a leading voice for long-term, patient capital, the Council advocated vigorously for many elements in the new financial blueprint. The Dodd-Frank Act has much in common with the recommendations of the Investors’ Working Group in its July 2009 report, "U.S. Financial Regulatory Reform: The Investors' Perspective," which Council members endorsed. The report called on Congress and the administration to strengthen and reinvigorate existing regulatory agencies, close gaps in regulation, improve corporate governance of U.S. public companies and create a federal systemic risk oversight board.
In particular, the Council supported measures designed to strengthen corporate governance, enhance the oversight and accountability of credit rating agencies, establish meaningful regulation of trading in OTC derivatives and bolster the resources and independence of the Securities and Exchange Commission (SEC). The Council also advocated for preserving the independence of the accounting standards-setting process and opposed measures that would let bank regulators override financial accounting and reporting standards developed by independent authorities.
To view the many comment letters that the Council filed on regulatory reform proposals with the House, Senate, Treasury Dept, Federal Reserve and other federal agencies, please visit the Council Correspondence page as well as the correspondence archives for 2010 and 2009. Since enactment of Dodd-Frank, the Council has continued to speak out to help shape regulations to implement the financial reform law. Please visit the Issue Briefs & Resources page for links specifically to Council comment letters and Dodd-Frank issue briefs that focus on proposed rules and issues that have emerged since the law was enacted..
