Dodd-Frank Wall Street Reform and Consumer Protection Act

Remember that little thing that happened in 2008 that ruffled some people’s financial feathers? Okay, yeah, it wasn’t little at all...the financial crisis of 2008...which had all the horror of a great horror movie, but without any of the raw action of exorcisms or creepy-crawly-ghost-children.

The Dodd-Frank Wall Street Reform and Consumer Protection Act was legislation made to slap some reforms on the financial sector (in 2010, via the Obama administration). It’s a casual 2,300-ish pages that was designed to slowly roll out some checks and balances on the financial sector to do what the title says it’s supposed to do: reform Wall Street so they don’t screw over consumers again...because that wasn’t cool. And the government bailed out the banks, so what’s stopping them from doing it all over again if they’re thinking "It’s fine, you guys, we got bailed out last time, so we’ll get bailed out next time."?

But....the Trump administration voted to roll back key pieces of Dodd-Frank like it’s Walmart the week before Christmas. Dodd-Frank does things like draw some lines between the investment and commercial functions of banks to protect consumers, and restricting the activity banks can engage in, particularly the super-risky stuff. Dodd-Frank isn’t only designed to make sure banks aren't playing risky games with consumer money, but also to minimize conflicts of interest, which was a big part of the ‘08 crisis.

So...all that might be taken back...but it wouldn’t be the first time. There was this legislation called the Glass-Steagall Act in 1933, which separated commercial banks from investing business-things to protect consumers. Yeah, 1933...that’s right after the Great Depression, when about 5,000 banks failed and the economy fell apart. Glass-Steagall was repealed in 1999, which many argue allowed banks to do what they did that led to the ‘08 financial crisis. And then Dodd-Frank, a.k.a. Glass-Steagall 2.0 was born, and like Glass-Steagall 1.0, it's getting torn down. And ‘round and 'round we go.