On the 10th anniversary of Dodd-Frank, the Obama Foundation has a great look back at wall st reform: obama.org/wall-street-re…
They asked if I would do a short thread on it. So here's 10 tweets for the 10th anniversary.
They asked if I would do a short thread on it. So here's 10 tweets for the 10th anniversary.
A decade ago, we signed Dodd-Frank into law—an act with many complex fixes, but one that was fundamentally about reestablishing the rules of the road to prevent things like the financial crisis from happening again and make it less destructive when things went wrong. 1/
Economists and others will continue to debate factors that contributed to the financial crisis of 2008—a housing bubble, low personal savings rates, Fannie and Freddie, etc—but one of the biggest factors was that we ripped up the existing regulations for the financial sector. 2/
The Great Depression was the last big financial catastrophe of our time. It led to the financial regulation system of 1934 which created many things we know today: the FDIC and insured bank deposits, the Securities and Exchange Commission to oversee trading and investment. 3/
Much of this was controversial at the time but looking back was a triumph that helped avoid the repeated financial crises that had plagued us up until then. 4/
By the 1990s, though, a lot had happened in financial markets. 1934 laws were getting creaky. Government repealed major parts of old regulations, but didn’t consider replacements. Instead, we relied on ‘self-regulation’ which the financial crisis showed to be nonsense. 5/
Dodd Frank ultimately did many things to solve for this. Some of the most important ones were the following: 6/
It set up @CFPB, an agency to specifically protect consumers from fraud, trickery and dishonesty and various manner of predatory behavior by financial companies. 7/
It made sure large financial institutions have a regulator and have enough money in reserve to weather a crisis. Some of the biggest financial companies in the world had been able to set themselves up, legally, with basically no oversight. 8/
It created a way for big financial companies to be safely liquidated if they get into trouble. And made it so they can’t threaten to blow up other financial firms unless they are bailed out. 9/
Finally, it forced the trading of many types of financial instruments like derivatives to be done on exchanges in the light of day to ensure honesty. Each of these is really important and would have helped us during the financial crisis—but continue to help us today. 10/end
