RES IPSA LOQUITUR
“the thing itself speaks”
WILL THE
DODD-FRANK ACT OF 2010
BRING TRUE
ECONOMIC RECOVERY?
By Diana K. Powell, Esq.
T
he financial crisis of 2008 propelled the Congress
of the United States of America to respond by
taking action in order to try to find solutions for
the nation’s economic problems. The 2010 Dodd-Frank
Wall Street Reform and Consumer Protection Act was
the product of Congress’ response to the crisis. However,
nearly two years after the passage of the Dodd-Frank
Act, questions still persist. Is the Act the codification of
economic ideals that will positively transform the United
States’ economy, or is the Act just another knee-jerk
reaction of new Federal corporate regulations in response
to market turmoil?
The Dodd-Frank Wall Street Reform and Consumer
Protection Act (July 21, 2010) mandates that the United
States Securities and Exchange Commission (SEC) propose
and adopt rules for more than ninety provisions of the Act.
This also includes discretionary rulemaking authority for
several other provisions within the Act. According to the
SEC, only 75% of those mandatory rules have been written
and adopted as of September, 2012, over two years after the
Dodd-Frank Act was signed into law. This delay is a source
of concern and increased speculation for all participants in
the process.
Economic regulatory reform in response to economic crisis
can be found to have occurred multiple times throughout
history. Within the past 400 years, the government bodies
of Western Europe and Great Britain have enacted such
reforms to prevent or cull economic catastrophe. In his
1998 book, Anglo-American Securities Regulation:
Cultural and Political Roots, 1690-1860, Stuart Banner
explains that “new regulation tended to come immediately
after price declines.” The question before us now is this:
Is the Dodd-Frank Act a well-planned, well-thought-out
economic plan which will ultimately lead to the sought
after recovery of the United States’ economy or something
entirely different?
Scholars continue to debate this question. Minnesota Law
Review scholars have compared the Dodd-Frank Act to the
Sarbanes-Oxley Act of 2002 (SOX). The reviewers looked
at whether the Dodd-Frank Act was yet another example
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of “quack corporate governance,” in the same vein as
SOX. Their answer was affirmative. The researchers found
there is evidence to support the determination that DoddFrank actually complicates the economic recovery process
through a series of mandates that will hinder our recovery
and cost billions of dollars to implement.
Further, the conflict between the states’ rights to regulate
corporations incorporated within their borders and the
addition of laws and regulations imposed by the federal
government is setting up a future battle between state
regulation and an overall federal regulation of corporations.
The Minnesota Law Review asked, “Has Dodd-Frank
further eroded the system of competitive federalism that is
the unique genius of American corporate law by displacing
state regulation with federal law?” Only time will tell.
It is to be determined whether legal appeals to the DoddFrank Act will be successful. What is certain is that times
of economic crisis will continue to plague the US economy.
What is uncertain is whether the Dodd-Frank legislation
will help or hinder the present push to ref