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The Dodd-Frank Act Turns Five

The Lingering and Lasting Effects
Part 1 of a 2-Part Series

Stuart Quinn    |    Housing Policy

On July 21, 2015 the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA or Dodd-Frank Act) celebrated its fifth anniversary. Running 2,239 pages in total, the herculean legislation has redefined processes for much of the financial services sector. The combination of creating, instituting and enforcing these new regulations has likely caused sleepless nights for both the federal employees tasked with enforcement and private sector employees facing implementation deadlines. The half-decade anniversary of the DFA has further amplified its divisiveness, with legislators from both sides of the House hitting the speaking circuits to either magnify the blemishes or, tout the progress.1

Regulatory Rule Pages from the Dodd-Frank Act

Regulatory Rule Pages from the Dodd-Frank Act

Setting up Agencies

The Dodd-Frank Act established a number of new offices, including the first Federal Insurance Office, the Office of Financial Research at the Treasury Department; Office of Housing Counselors under Housing and Urban Development; the Office of Credit Ratings and most notably, the Consumer Financial Protection Bureau (the Bureau or CFPB).

Despite the two-year delay in confirmation of director Richard Cordray, which required a Congressional recess appointment, the CFPB quickly grew its operation by transitioning employees from the Federal Reserve and other federal agencies. At the onset, it was clear the agency would be a tenacious supervisor, employing and continuing to employ a 10 to 1 ratio of Supervision Enforcement and Fair Lending division staff to Consumer Education and Engagement division staff. The Bureau currently estimates their 2015 full-time employees at approximately 1,537. As stipulated by the Dodd-Frank Act, the Bureau also established a Civil Penalty Fund, designed to compensate consumers when a person or company violates a federal consumer financial protection law. To date, the fund has collected approximately $207 million from more than 45 different entities or persons. Relatively lean in personnel by federal agency standards, the Bureau prioritized authoring of the Title XIV rules (Ability-to-Repay and Qualified Mortgage rules), with the majority being completed in early 2013. According to the Federal Register, over 13,000 pages of published rules now exist from the DFA, 2,000 of which were authored in 2013 by the CFPB. The next two largest agencies, by page volume, that published rules under the DFA were the Commodities Future Trading Commission (801) and the Securities and Exchange Commission (646).

Cumulative Collection of Civil Penalty Fund

Cumulative Collection of Civil Penalty Fund

Since the CFPB was established, debates have continued in Congress and in the courts as to whether the CFPB governance structure should remain intact and the legal legitimacy of the recess appointment of the director. Legislative proposals have tried to remove the director role and establish a board. Furthermore, some legislators have called for the CFPB to be brought within the formal Congressional appropriations process, as they are currently funded by Federal Reserve transfers up to a certain cap.

[1] Maxine Waters and Sherrod Brown at Center for American Progress

Chris Dodd and Barney Frank on CSPAN

Jeb Hensarling at the American Enterprise Institute

Richard Shelby at the Heritage Foundation

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