Dodd-Frank Act Dodd-Frank act emanated from 2008 financial crisis. This was not the first financial crisis to hit the world but was one among many. Irrespective of being another financial crisis, the 2008 financial crisis was revealed to have caused more damage than the previous ones. This could be identified socially, politically and economically. The US in its effort to create barriers to the future financial crisis, enacted Dodd-Frank act in 2010 under the leadership of President Obama (Ziegler & Woolley, 2016). Ziegler & Woolley (2016) identifies that the act proposed that regulatory agencies be consolidated, the national thrift chapter be eliminated and a fresh oversight council to be established to identify any fore coming financial crisis. …show more content…
This was done by increasing its independence and reducing its accountability. For example, it led to the establishment of the unelected leadership of the Fed (Barth, Prabha, &Wihlborg, 2014). Fed policy during the financial crisis has helped Dodd-Frank act. For example, during the financial crisis, Fed engaged a number of policies that led to the stabilization of the financial market. This involved provision of facilities that would ensure there was liquidity. Liquidity was reached through the creation of vast reserves and shoring up of institutions. In addition, the Fed ended up lending institutions that were in trouble. This included institutions that were involved in dodgy collaterals. Additionally, it did not stop at being the lender of the last resort but it was also the investor of the last resort. Dodd-Frank bill realized the strengths of these policies taken by Fed during the crisis and therefore set its role to maintaining financial stability. This 2010 act allowed the Fed management to use of its common sensible tools to tame any systemic risks that would occur. The act on its recognition of Fed policy potential, it added Fed more responsibility of