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 * The Dodd–Frank Wall Street Reform and Consumer Protection Act **

If the Great Recession illustrates anything, it is most definitely that the financial sector is a complex, powerful, and rather dangerous fixture in the American economy. The financial meltdown in October of 2008 was predicted by only a few experts and the government failed to act to prevent the disaster. As a result the crisis spread from Wall Street to "Main Street." Considering the harm resulting from the meltdown and the populist anger over the bailing out of the investment banks involved in the meltdown, it is quite apparent that something should be done to prevent a crisis of this magnitude from ever occurring again. The response provided by the 111th Congress was the Dodd–Frank Wall Street Reform and Consumer Protection Act which President Obama signed on July 21, 2010. As the bill was moving through the legislative process Connecticut Senator Chris Dodd claimed that it would cause the end of "too big to fail", the notorious policy of realizing that the failure of certain institution would cause a big enough catastrophe that it is essential to maintain their solvency. This is clearly a worthy goal as the term has become a rallying cry for those dissatisfied with the actions of the government as well as creates a culture where such institutions realize they will not be held accountable for otherwise fatal mistakes and thus take excessive risks. The final legislation goes about ending "Too Big to Fail" with several measures. One measure is the Volcker Rule which limits speculative investments by banks through regulation in hopes of keeping banks from becoming insolvent and thus in need of bailing out. Additionally, the Dodd-Frank Act creates requirements on capital and leveraging so that banks are less susceptible to becoming insolvent when their investments go awry. Finally, large, complex companies will be required to have plans for their liquidation if they are to fail and it is affirmed that taxpayers' dollars will not be called upon to aid this process. Importantly, the bill also attempts to prevent future crises through the creation of the Financial Stability Oversight Council. This new agency is comprised of the heads of such institutions as the Department of the Treasury, the Federal Reserve, the SEC, and the FDIC and is charged with the tasks of identifying and responding to threats to the financial stability of the nation and promoting market disciple and dispelling the belief that the government will cover its losses. To fulfill its duties the Financial Stability Oversight Council is given several powers. It can choose to regulate nonbank financial companies if it deems the institution to be dangerous. Additionally, it can forcibly break up companies it sees as too large or complex thus actively preventing the aforementioned "too big to fail." Additionally, the act creates and strengthens regulations to provide for financial stability. The complex derivates and default swaps responsible for the 2008 financial collapse are required to be traded with greater transparency. Greater oversight is placed on the agencies that rate these instruments as an overseeing office is created within the SEC and they are required to disclose their methodologies in hopes that hey will not abuse their power. To protect consumers, the Bureau of Consumer Financial Protection is created by this act. This agency, housed inside the Fed, writes and enforces rules aimed to protect individuals from predatory lending practices in areas such as credit cards and checking accounts. Additionally, it aims to promote financial literacy to prevent people from being easily taken advantage of by the financial services industry like they were in the the recent sub-prime mortgage fiasco. One might easily predict the conservative criticism to this bill simply from the number of times the word "regulation" is used. The standard argument is essentially based on that; that the regulators are given too much power to restrict the competitiveness of financial firms and the bureaucracy will ballon as new regulators are required. Additionally, many worry, the act will not end "too big to fail" as a partnership between big government and big business will develop. A Republican controlled House of Representatives may not be able to repeal the Act but will have power over its funding. In contrast, the liberal response is that the reforms did not go far enough to change the way Wall street operates. Economist Dean Baker asserts that the Volcker Rule should be strengthened and that the big banks should be broken up immediately. Additionally, he supported the creation of the Bureau of Consumer Financial Protection and having Elizabeth Warren, a longtime advocator of the institution's creation, as a special advisor but is saddened by Obama's choice not to directly appoint her as its head. Nobel Prize winning economist Paul Krugman notes the consumer protection as a positive while pointing out the lack of size caps for banks. Additionally, Krugman also warns that the reforms are not safe from bad leadership and only really measurable in a crisis.