Dodd- Frank
Featured Piece
“A Critical Assessment of the Dodd-Frank Wall Street Reform Act and Consumer Protection Act,” Vox,November 24, 2010, by Professors Richard Sylla, Viral Acharya, Thomas F Cooley, Matthew Richardson, Ingo Walter.Of the recent reforms to make financial systems more robust, the US Dodd-Frank Wall Street Reform and Consumer Protection Act stands out. Despite being broadly in favour of its proposals, this column identifies flaws in its design that fail to deal with the main causes of the crisis and that will lead to further implicit government guarantees...Read More
In the Media
“Could Regulation Circa 2010 have averted the crisis?” by Professor Viral Acharya, Livemint.com, January 3, 2011.
“A Critical Assessment of the Dodd-Frank Wall Street Reform Act and Consumer Protection Act,” by Professors Viral Acharya, Thomas F Cooley, Matthew Richardson, Richard Sylla, Ingo Walter, Vox,November 24, 2010.
“Failures of the Dodd-Frank Act,” by Professor Viral Acharya, FT, July 15, 2010.
Papers
ABSTRACT (Click Here for Paper)
Recently, Friedrich Hayek's classic The Road to Serfdom, a warning against the dangers of excessive state control, was the number one best seller on Amazon. At the same time, the foundation of much modern economics and capitalism—Adam Smith's The Wealth of Nations—languished around a rank of 10,000. It is a telling reflection of the uncertain times we are in that precisely when confidence in free markets is at its all-time low, skepticism about the ability of governments and regulation to do any better is at its peak. So it is no trivial task for the United States Congress and the Obama administration to enact the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and convince a skeptical public that financial stability will be restored in the near future.
The Act is widely described as the most ambitious and far-reaching overhaul of financial regulation since the 1930s. Together with other regulatory reforms introduced by the Securities and Exchange Commission (SEC), the Federal Reserve (the Fed), and other regulators in the United States and Europe, it is going to alter the structure of financial markets in profound ways. In this Prologue, we provide our overall assessment of the Act in three different ways: from first principles in terms of how economic theory suggests we should regulate the financial sector; in a comparative manner, relating the proposed reforms to those that were undertaken in the 1930s following the Great Depression; and, finally, how the proposed reforms would have fared in preventing and dealing with the crisis of 2007 to 2009 had they been in place at the time.
Recently, Friedrich Hayek's classic The Road to Serfdom, a warning against the dangers of excessive state control, was the number one best seller on Amazon. At the same time, the foundation of much modern economics and capitalism—Adam Smith's The Wealth of Nations—languished around a rank of 10,000. It is a telling reflection of the uncertain times we are in that precisely when confidence in free markets is at its all-time low, skepticism about the ability of governments and regulation to do any better is at its peak. So it is no trivial task for the United States Congress and the Obama administration to enact the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and convince a skeptical public that financial stability will be restored in the near future.
The Act is widely described as the most ambitious and far-reaching overhaul of financial regulation since the 1930s. Together with other regulatory reforms introduced by the Securities and Exchange Commission (SEC), the Federal Reserve (the Fed), and other regulators in the United States and Europe, it is going to alter the structure of financial markets in profound ways. In this Prologue, we provide our overall assessment of the Act in three different ways: from first principles in terms of how economic theory suggests we should regulate the financial sector; in a comparative manner, relating the proposed reforms to those that were undertaken in the 1930s following the Great Depression; and, finally, how the proposed reforms would have fared in preventing and dealing with the crisis of 2007 to 2009 had they been in place at the time.
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