BILL MENTIONS: Dodd-Frank Related Legislation

3 min read

As the U.S. economy recovers from the 2008 crisis, many wonder if the 2010 Dodd-Frank Act will be able to prevent future banking crises while still allowing investments to flourish. In response, several lawmakers have proposed legislation related to Dodd-Frank.

A Brief History

  • Following the Great Depression, the Glass-Steagall Act was enacted in 1933. The Glass-Steagall act banned commercial banks from dealing securities and prohibited investment banks from accepting deposits – essentially separating commercial and investment banks to protect consumers from risky investments and prevent future economic crises.

  • Under President Bill Clinton, the Gramm-Leach-Bliley Act of 1999 deregulated the financial market and modified the Glass-Steagall Act, allowing well-capitalized commercial banks and non-bank financial entities to affiliate under financial holding companies. It is often cited as a cause of the 2008 financial collapse.

  • After the 2008 financial crisis, the Dodd-Frank Act was signed into law in 2010. Its provisions include:

    • Volcker Rule: aims to prevent excessive risk taking by prohibiting consumer banks from proprietary trading for their own profit (similar to Glass-Steagall, in that it limits commercial banks’ engagement in investment bank operations), and limiting financial institutions ability to grow their non-deposit liabilities

    • Financial Stability Oversight Council: can break up large banks deemed too large in size, lessening systemic risk

    • Consumer Financial Protection Bureau (CFPB): a consumer protection watchdog to prevent predatory mortgage lending and improve transparency of loan terms

    • Prevent future bailouts: by requiring the liquidation of future financially weak firms, with a clause that Wall Street not taxpayers will be responsible

  • Since President Barack Obama signed the Dodd-Frank Act into law, several legislators have proposed changes. The latest being Rep. Hensarling’s proposal to dismantle Dodd-Frank and replace it with a plan to deregulate the financial market.

Related Bills

Bills that call for a return to Glass-Steagall:


Bills that call for less regulation of the financial market:

Bills that call for greater regulation of the financial market: