Dodd Frank Wallstreet Reform and Consumer Protection Act

The Dodd Frank Wall Street Reform and Consumer Protection Act was enacted on July 21 2010 amending the Securities Exchange Act of 1934 (“Exchange Act”) and imposing new requirements for credit rating agencies as Moodys and Standard & Poors. The Act contains more than 90 provisions that require SEC rulemaking. A new authority in the house of Federal Reserve (Financial Stability Oversight Council), responsible for compliance with consumer financial laws, was created. The authority introduced new capital requirements, effected the regulation of OTC derivatives, the regulation of credit rating agencies as well as corporate governance and executive compensation practices

The standardization of credit rating should facilitate the comparison of credit ratings across rating agencies and will result in fewer opportunities for credit ratin manipulation.  Commenters as the Institutional Money Market Funds Association commented that the standardization would eliminate the need for more than one credit rating agency and that the absense of a competitve market could result in a subsequent lowering of standards and potential market failure.

For more information (cf. SEC, Dodd-Frank, Banking senate, mofo, SEC, retrieved 12/09/20)

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