In 2010, the US Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, the largest financial regulation overhaul since the 1930s.
Named after its Democratic sponsors in Congress, Senator Chris Dodd and Representative Barney Frank, the law aimed at preventing a repeat of the 2008 financial crisis.
The 2000-page act included sweeping new rules for banks, hedge funds and complex financial transactions called derivatives.
The act also created a new Consumer Financial Protection Bureau to protect retail users of banking products and a new Financial Stability Oversight Council to watch for looming threats to the financial system.
US regulators are in the process of churning out hundreds of new rules that cover everything from limiting proprietary trading (taking bets with a bank’s own money rather than for clients) to regulating swaps dealers.
US president Barack Obama, who signed the act into law, said: “The American people will never again be asked to foot the bill for Wall Street’s mistakes,” but many in the financial services sector say the law and accompanying regulations are confusing, expensive and in some cases unworkable. [1]
• The Dodd-Frank initiative is one of a number of transparency initiatives (see also Extractives Industry Transparency Initiative, EU Accounting and Transparency Directive and CRD IV). Dodd-Frank will require companies in the extractives industry to report all payments made to governments. A timeline for the implementation of the rules is not yet known after rules originally implemented on 22 August 2012 were vacated and remanded after a successful challenge by the American Petroleum Institute. [2]
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