Pros And Cons Of Dodd Frank Reform
The Dodd-Frank Reform
The financial crisis of 2008 created one of the most uncertain times in the United States’ economy history. Not only did it affect thousands of businesses, but also consumer’s confidence dropped to levels not seen since the great depression. After the failure to address the issues created by the banks, the economy took a turn for the worse. The only way to move the economy forward was to bailout those banks and businesses that were essential to the US economy. Using taxpayer’s money, the bailouts of hundreds of banks and other companies took place in order to save the US economy. In order to prevent the occurrence of these events, in 2010 Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. This act, intended to reduce the risks in the United States financial system, will be further discussed in this paper, as well as what caused the collapse of the economy, how the bailout was implemented, how it affects the accounting profession, and the pros and cons. …show more content…
The financial markets were in great shape and the housing market was booming. Two of the mentioned drivers of the economy were also the main drivers during the downturn. Financials institution were giving out substantial number of mortgage loans, thus creating “fake” money. This way major banks were able to project a healthy financial image, while in fact trillions of dollars were accounting for more than half of the money created by the banks. The housing and commercial market were creating a significant gap between the actual money in possession of the banks. As a result, the housing market prices were increasing at a faster rate than wages were, resulting in people who had bought a house at a price they could not afford, were now defaulting on their loans. Once they realized what exactly was going on, they could not prevent what was bound to happen, and that was the beginning of the 2008 financial
The financial crisis of 2008 created one of the most uncertain times in the United States’ economy history. Not only did it affect thousands of businesses, but also consumer’s confidence dropped to levels not seen since the great depression. After the failure to address the issues created by the banks, the economy took a turn for the worse. The only way to move the economy forward was to bailout those banks and businesses that were essential to the US economy. Using taxpayer’s money, the bailouts of hundreds of banks and other companies took place in order to save the US economy. In order to prevent the occurrence of these events, in 2010 Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. This act, intended to reduce the risks in the United States financial system, will be further discussed in this paper, as well as what caused the collapse of the economy, how the bailout was implemented, how it affects the accounting profession, and the pros and cons. …show more content…
The financial markets were in great shape and the housing market was booming. Two of the mentioned drivers of the economy were also the main drivers during the downturn. Financials institution were giving out substantial number of mortgage loans, thus creating “fake” money. This way major banks were able to project a healthy financial image, while in fact trillions of dollars were accounting for more than half of the money created by the banks. The housing and commercial market were creating a significant gap between the actual money in possession of the banks. As a result, the housing market prices were increasing at a faster rate than wages were, resulting in people who had bought a house at a price they could not afford, were now defaulting on their loans. Once they realized what exactly was going on, they could not prevent what was bound to happen, and that was the beginning of the 2008 financial