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The Wall Street Reform and Consumer Protection Act (Dodd-Frank Act or act) (P.L. 111-203, 124 Stat. 1376 (2010)), signed into law by President Obama on July 21, 2010, institutes sweeping changes to several aspects of financial regulation. Among numerous provisions, the act:
HIGHLIGHTS OF THE LEGISLATION
Consumer Protections with Authority and Independence: Creates a new independent watchdog, housed at the Federal Reserve, with the authority to ensure American consumers get the clear, accurate information they need to shop for mortgages, credit cards, and other financial products, and protect them from hidden fees, abusive terms, and deceptive practices.
Ends Too Big to Fail Bailouts: Ends the possibility that taxpayers will be asked to write a check to bail out financial firms that threaten the economy by: creating a safe way to liquidate failed financial firms; imposing tough new capital and leverage requirements that make it undesirable to get too big; updating the Fed’s authority to allow system-wide support but no longer prop up individual firms; and establishing rigorous standards and supervision to protect the economy and American consumers, investors and businesses.
Advance Warning System: Creates a council to identify and address systemic risks posed by large, complex companies, products, and activities before they threaten the stability of the economy.
Transparency & Accountability for Exotic Instruments: Eliminates loopholes that allow risky and abusive practices to go on unnoticed and unregulated -- including loopholes for over-the-counter derivatives, asset-backed securities, hedge funds, mortgage brokers and payday lenders.
Executive Compensation and Corporate Governance: Provides shareholders with a say on pay and corporate affairs with a non-binding vote on executive compensation and golden parachutes.
Protects Investors: Provides tough new rules for transparency and accountability for credit rating agencies to protect investors and businesses.
Enforces Regulations on the Books: Strengthens oversight and empowers regulators to aggressively pursue financial fraud, conflicts of interest and manipulation of the system that benefits special interests at the expense of American families and businesses.
STRONG CONSUMER FINANCIAL PROTECTION WATCHDOG
The Consumer Financial Protection Bureau
LOOKING OUT FOR THE NEXT BIG PROBLEM: ADDRESSING SYSTEMIC RISKS
The Financial Stability Oversight Council
ENDING TOO BIG TO FAIL BAILOUTS
Limiting Large, Complex Financial Companies and Preventing Future Bailouts
REFORMING THE FEDERAL RESERVE
CREATING TRANSPARENCY AND ACCOUNTABILITY FOR DERIVATIVES
Bringing Transparency and Accountability to the Derivatives Market
NEW OFFICES OF MINORITY AND WOMEN INCLUSION
At federal banking and securities regulatory agencies, the bill establishes an Office of Minority and Women Inclusion that will, among other things, address employment and contracting diversity matters. The offices will coordinate technical assistance to minority-owned and women-owned businesses and seek diversity in the workforce of the regulators.
Raising Standards and Regulating Hedge Funds
CREDIT RATING AGENCIES
New Requirements and Oversight of Credit Rating Agencies
EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE
Gives Shareholders a Say on Pay and Creating Greater Accountability
IMPROVEMENTS TO BANK AND THRIFT REGULATIONS
Establishes New Offices of Minority and Women Inclusion at the federal financial agencies
CREDIT SCORE PROTECTION
SEC AND IMPROVING INVESTOR PROTECTIONS
SEC and Improving Investor Protections
Reducing Risks Posed by Securities
Better Oversight of Municipal Securities Industry
TACKLING THE EFFECTS OF THE MORTGAGE CRISIS
TRANSPARENCY FOR EXTRACTION INDUSTRY
Congo Conflict Minerals:
Source: United States Senate Committee on Banking, Housing and Urban Affairs
For full text of the law clickhere.
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