Dodd-Frank Act Creates Consumer Protection Agency, Much More

Lora Bentley
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Sarbox Compliance: Benefits Beyond the Checkbox


President Obama signed the financial reform bill into law Wednesday, according to The Boston Globe. The Dodd-Frank Wall Street Reform and Consumer Protection Act "represent[s] the strongest consumer financial protections in history," Obama said at the signing ceremony.


Among other things, the legislation establishes a Financial Stability Oversight Council, which will identify and address systemic risk, and a supporting Office of Financial Research. A Bureau of Consumer Financial Protection will be created within the Federal Reserve, and the Securities and Exchange Commission soon will have a new Office of Investor Advocate.


The legislation gives the government more power to step in and "unwind" financial firms that are failing, enables more oversight of the derivatives market, and if the new regulatory bodies and offices mentioned previously are any indication, aims to do a whole lot to protect the individual investor. The Wall Street Journal reports:

[The Bureau of Consumer Financial Protection] will be funded by the Federal Reserve and have independent powers to write and enforce rules governing how loans and other financial products are offered, bearing on everything from the type of mortgages people can get to the fees on their credit cards.

The president is expected to name his choice to lead the bureau soon. Many expect the job will go to Harvard Law School's Elizabeth Warren, who first brought up the idea of such an agency.


While investor groups may be applauding the Act's strong provisions aimed at protecting investors, business consulting and internal audit firm Protiviti cautions that the Act may not accomplish as much as legislators hope. In a recent client newsletter, the firm explained:

Our goal for financial services was better, not just more, regulation. We are skeptical that goal has been achieved.

Perhaps of most interest to our SMB readers, however, is this: The Dodd-Frank Act exempts non-accelerated filers from Sarbanes-Oxley Act 404(b) compliance requirements. Bill Bockwoldt posted the news for clients with one sentence on the Vibato blog.

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