Don't mess with (this) BILL

In an appearance on Capitol Hill Thursday, Federal Reserve Board Chair Janet Yellen delivered her verdict on the suggestion: bad idea. Yellen was delivering regularly scheduled testimony before the Joint Economic Committee when she was asked by Rep. Carolyn Maloney (D-NY) for her thoughts on the law that placed new restrictions on the financial services industry in the wake of the financial crisis that led to the Great Recession. “We lived through a devastating financial crisis and a high priority for all Americans I think should be we that want to see put in place safeguards through supervision and regulation that result in a safer and sounder financial system,” Yellen said. “And I think we have been doing that and our financial system as a consequence is safer and sounder and many of the appropriate reforms are embodied in Dodd-Frank.” She cited a number of beneficial effects she believes the law has had, with regard to the stability of both individual financial institutions and on the broader financial system itself. Among other things she noted that banks now carry more capital to cushion against losses and have much more stringent liquidity requirements. Derivatives trading has been centralized and more closely regulated, and regulators have far more authority than they used to when it comes to liquidating the assets of a failing bank. She said that the requirement that the largest banks create so-called “living wills” to assist in an orderly liquidation of their assets in the event of failure has not only reduced the perception that some banks are “too big to fail” but is also “really changing the mindset of large financial firms about how they need to run their businesses and making them safer and sounder.” The Dodd-Frank Act implements a large variety of financial reforms, explains CNBC, including the Volcker Rule, regulation of derivatives, creation the Consumer Financial Protection Bureau and creation of the Office of Credit Ratings. The act also includes a large number of other reforms. The act's authors based these reforms on the causes of the 2008 financial crisis to prevent similar future crises. The Volcker rule stops banks from owning hedge funds for their own profit, states About.com. Dodd-Frank allows the Securities Exchange Commission the power to regulate risky derivatives, such as credit default swaps, which were partially to blame for the 2008 financial crisis. Dodd-Frank creates the Consumer Financial Protection Bureau to regulate consumer banking products, such as credit cards, payday loans and mortgage rules, in an attempt to stop predatory lending. The new Office of Credit Ratings regulates the credit rating industry, which is accused of providing inflated ratings to bad derivatives before 2008. Many Wall-Street investors feel that Dodd-Frank hurts economic growth with overly strict new rules, reports CNBC. However, many other commentators feel that the new regulations do not go far enough to stop further financial crises. One of the agencies that the Dodd-Frank Act created was the Financial Stability Oversight Council and the Orderly Liquidation Authority which tracks the financial stability of firms large enough to cause significant harm to the economy if they do not survive. If those companies become too weak, the law as it stands, in 2015, sets the stage for orderly liquidation, keeping tax dollars from supporting those types of firms. If banks become so large that they represent a risk to the financial system, the council can break those banks up and elevate reserve requirements, as stated by Investopedia. The Consumer Financial Protection Bureau was set up to stop predatory mortgage practices and make mortgage paperwork simpler for customers to understand before they sign contracts at closing. The Bureau also keeps mortgage brokers from elevating their commissions by boosting fees and interest rates, and it prevents loan originators from pushing borrowers to the loan that gives the originator the highest commission.