The Dodd-Frank Wall Street Reform Act
Wall Street Reform
It does not take long in the huge world of finance for it to become a financially unstable economic atmosphere. No one is at ease when the government has to bail out major financial institutions just to ensure that there is not an economic collapse that would ripple across the globe. The formation and passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act was meant to protect the entrepreneur all the way to the customer.
The Dodd-Frank Wall Street Reform Act was passed to provide oversight and regulate bother financial institutions as well as the products that they sell. Although the legislation seems to cover a broad range of financial arenas, it was instrumental in creating new organizations and regulations which are enforced on the federal level. These organizations provide more oversight on all sides, companies and the products that they sell. These regulations and guidelines are meant to create much more stability in the state of finances from the consumer up to the big business which can no longer count on a government bailout due to lack of proper organization and planning.
Protection of Consumers
The Dodd-Frank Act was intended to provide greater protection for consumers. Under this Act came the formation of the Consumer Financial Protection Bureau which has many responsibilities one of which is to create educational materials that is aimed at providing clarity for many of the commonly used terms in finance. Publications will give precise definitions to a wide variety of terms such as credit scores, risks, fees and penalties. Informed consumers are less likely to suffer from fraud.
There are new rules and regulations regarding credit cards, payday loans, bank accounts and car or home loans. It also means that financial organizations such as debt collectors, credit unions and mortgage companies are receiving oversight by the CFPB. The CFPB will also provide rules concerning many types of transactions that are common among consumers. Banks and other financial institutions can no longer pay for overdrawn accounts and automatically pass the overdraft fees on to the consumer without their permission to do so. The latest guidelines make it a little harder to obtain a loan; however, it is more likely that when one is obtained the borrower is capable of handling the financial responsibility of paying it back.
Derivatives, Securitized Investments and Insurance
There are more structured regulations in place now for many of the complex financial products. The government now conducts more reviews of products to ensure customers of product safety. Companies are required to disclose any involved financial risks to consumers. Derivatives are now treated more like securities as is centralized exchange trading as far as the regulating of disclosing risks are concerned. Securitized investments and mortgage backed securities are required to keep a certain equity stake which provides protection.
Economic Indications
To keep the government from needed to provide a bailout for traditional mergers and acquisition industries, each company must have a strategic plan in place which covers both growth and an exit when necessary. This will help to restrict the size and complexity of larger financial institutions. There are also more evaluation procedures in place which will be used to measure a company to help prevent financial upheaval. This can protect consumer and business from a wide spread economic disaster.
Economically Speaking
This is a simple and brief overview of some of the many economic benefits that stem from the creation and implementation of the Dodd-Frank Act. It gets more information into the hands of consumers so that they can make wiser choices and know when to hire a financial adviser when it is necessary. The legislation is not meant to be binding but to help provide consumers some protection through having stricter standards and regulations for financial institutions. This brings more accountability and transparency to the business for the benefit of the consumer.
The Dodd-Frank Wall Street Reform Act was passed to provide oversight and regulate bother financial institutions as well as the products that they sell. Although the legislation seems to cover a broad range of financial arenas, it was instrumental in creating new organizations and regulations which are enforced on the federal level. These organizations provide more oversight on all sides, companies and the products that they sell. These regulations and guidelines are meant to create much more stability in the state of finances from the consumer up to the big business which can no longer count on a government bailout due to lack of proper organization and planning.
Protection of Consumers
The Dodd-Frank Act was intended to provide greater protection for consumers. Under this Act came the formation of the Consumer Financial Protection Bureau which has many responsibilities one of which is to create educational materials that is aimed at providing clarity for many of the commonly used terms in finance. Publications will give precise definitions to a wide variety of terms such as credit scores, risks, fees and penalties. Informed consumers are less likely to suffer from fraud.
There are new rules and regulations regarding credit cards, payday loans, bank accounts and car or home loans. It also means that financial organizations such as debt collectors, credit unions and mortgage companies are receiving oversight by the CFPB. The CFPB will also provide rules concerning many types of transactions that are common among consumers. Banks and other financial institutions can no longer pay for overdrawn accounts and automatically pass the overdraft fees on to the consumer without their permission to do so. The latest guidelines make it a little harder to obtain a loan; however, it is more likely that when one is obtained the borrower is capable of handling the financial responsibility of paying it back.
Derivatives, Securitized Investments and Insurance
There are more structured regulations in place now for many of the complex financial products. The government now conducts more reviews of products to ensure customers of product safety. Companies are required to disclose any involved financial risks to consumers. Derivatives are now treated more like securities as is centralized exchange trading as far as the regulating of disclosing risks are concerned. Securitized investments and mortgage backed securities are required to keep a certain equity stake which provides protection.
Economic Indications
To keep the government from needed to provide a bailout for traditional mergers and acquisition industries, each company must have a strategic plan in place which covers both growth and an exit when necessary. This will help to restrict the size and complexity of larger financial institutions. There are also more evaluation procedures in place which will be used to measure a company to help prevent financial upheaval. This can protect consumer and business from a wide spread economic disaster.
Economically Speaking
This is a simple and brief overview of some of the many economic benefits that stem from the creation and implementation of the Dodd-Frank Act. It gets more information into the hands of consumers so that they can make wiser choices and know when to hire a financial adviser when it is necessary. The legislation is not meant to be binding but to help provide consumers some protection through having stricter standards and regulations for financial institutions. This brings more accountability and transparency to the business for the benefit of the consumer.