On July 21, 2010, President Barack Obama signed into law one of the most hotly debated pieces of legislation in recent memory: the Dodd-Frank Wall Street Reform and Consumer Protection Act. Co-authored by former Senate Banking Committee Chairman Chris Dodd (D-Conn.) and former House Financial Services Committee Chairman Barney Frank (D-Mass.), the landmark law has been hailed as the Glass-Steagall of its era. 

Looking back on Dodd-Frank Act’s tenth anniversary, this article offers a highlight reel of the good, the bad, and the downright ugly wrapped up in this 350,000-word bill. 

The Good 

Despite its vilification over the years, the Dodd-Frank Act has enhanced the stability and strength of the U.S. financial system. The past four months proved the banking industry’s strength when tested by severe economic and operational challenges brought on by the COVID-19 pandemic. At an event hosted by the Brookings Institution commemorating the Act’s anniversary, the bill’s authors said it positioned the banking system as a stabilizing force and without it, “this crisis we are going through now would have been far worse,” said Dodd. 

Frank agreed, saying the law has “held up very well” under the Trump administration. “For all the denunciations of the bill... the economy and the banking system functioned very well.” 

The pair said the law’s capital and liquidity requirements and stress testing, along with the creation of the Financial Stability Oversight Council (FSOC) all helped put the banking system in a position to assist during the current crisis, rather than fall victim to it. 

The Bad 

When it was first enacted, one of the most challenging aspects of Dodd-Frank for most of the banks in the country was the law’s one-size-fits-all approach to compliance. The over-zealous law applied the same rigorous regulations and reporting requirements to community banks as it did to Wall Street investment banks. The undue compliance pressure caused many smaller banks to join together through merger activity in order to survive and continue serving their communities. 

After eight years of strident lobbying efforts by WBA and other banking associations, the industry finally achieved its goal of fair, risk-based regulation. In 2018, Sen. Mike Crapo (R-Idaho) led a bipartisan group of legislators in crafting and passing S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act. Signed into law by President Trump on May 24, 2018, the law’s biggest impact was to raise the arbitrary threshold above which banks are subjected to far more rigorous regulatory standards from $50 billion in assets to $250 billion. Even Frank agreed that this change was a positive one. S. 2155 “preserved most of the regulatory bill, over 90%,” he said during a 2018 interview with NPR

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In another corrective move toward fairness, the FSOC voted to implement an “activities-based” approach to identifying and addressing potential risks to financial stability in December 2019. This is a significant move toward increased transparency, better due process, and a fairer approach to the designation process, while still ensuring the FSOC can do its duty in identifying risks to the U.S. financial stability. How the FSOC will implement this new approach remains to be seen. 

The Ugly 

The Consumer Financial Protection Bureau (CFPB), now officially the Bureau of Consumer Financial Protection, was one of the most fiercely disputed and consequential creations of the Dodd-Frank Act. The brainchild of Sen. Elizabeth Warren (D-Mass.) when she was still a Harvard law professor, the Bureau was given broad authority and little accountability by the Dodd-Frank Act. Headed by a Director, rather than an executive board like the FDIC and SEC, and funded by the Federal Reserve’s earnings, not Congressional appropriations, the Bureau wielded unilateral powers over nearly the entire financial services sector for almost a decade. 

Still Evolving 

Fortunately, politicians and judges continue to modify the Dodd-Frank Act as its effects on the financial industry—intended and unintended—become clearer. One of the most significant recent changes came not from the Legislative branch but the Judicial. On June 29, the U.S. Supreme Court issued a ruling giving the President the authority to remove the CFPB’s director at will, rather than only for cause. This adjustment provides an important check and balance for the powerful agency, though opponents to the decision say it will subject the regulator to the shifting winds of political favor. Time will tell. 

As most good and lasting laws do, Dodd-Frank has and will continue to evolve, changing to address new circumstances and needs in the financial sector. 

Seitz is WBA operations manager and senior writer.