Research On Financial Supervision Reform In The "Dodd-Frank Act" Of The United States

Nearly thirty years before the 2008 subprime crisis,the financial regulatory thinking and the reform of the financial regulatory system were dominated as deregulation,and it is believed that the market could repair its defects automatically.Actions in responding to the subprime crisis,including the rescue measures implemented by the U.S.Treasury Department and the Federal Reserve,and a series of subsequent reforms in financial supervision,it reaffirmed that government supervision is indispensable in the financial field,and the market itself cannot achieve effective supervision.Since the implementation of the Dodd-Frank Act,various financial regulatory agencies in the United States have formulated a large number of regulatory regulations and rules in line with the requirements of the Dodd-Frank Act,which is considered to be the greatest reform in the United States since the introduction of the Grass-Steagall Act.This paper attempts to analyze the main regulatory mechanisms established by the the Dodd-Frank Act based on the analysis of changes in the concept of financial supervision and the analysis of the causes of the US subprime mortgage crisis,to evaluate the effectiveness of financial stability thereof as follows:The first part is to sort out the evolution and changes of the financial supervision theory in academia,focusing on the necesity of macro-prudential supervision mechanism when the micro-prudential supervision measures unable to deal with cross market risks.And the macro-prudential supervision theory is intruduced hereunder,including its corresponding supervision tools and the required operation mechanism.The second part is to summarize the key events during the course of the subprime crisis in the United States,to analyze their causes and the background of the Dodd-Frank Act regulatory reform,and to summarize the main content of the Dodd-Frank Act.The third part is to analyze the regulatory changes brought about by the implementation of the Dodd-Frank Act after the subprime crisis,to analyze the reasons for the rules and its main contents as well as its impact to the financial stability,including the establishment of a financial stability committee to reform the multi-level and multi-party supervision,the creating of the Bureau of Consumer Financial Protection to reform the financial consumer protection mechanism,theenhanced supervision of systemically important financial institutions,the regulating and restricting of securitization and OTC derivative financial markets.The purpose of those supervision reforms is to decrease the financial systematical risk and to enhance the financial stability.The fourth part is to analyze the major changes in the "Economic Growth,Deregulation and Consumer Protection Act" The purpose of this bill is to relax the strict regulatory measures of the Dodd-Frank Act and reduce the compliance burden of small and medium financial institutions,to promote the supply of credit to micro-enterprises and households and to boost economic development.However,its policy orientation of deregulation may further boost corporate leverage.The fifth part is to evaluate the effectiveness of achieving financial stability since the implementation of the Dodd-Frank Act and its amendments,the Economic Growth,Deregulation and Consumer Protection Act.The supervision mechanisms established by the Dodd-Frank Act,such as severe supervision measures to the systematical important institutions,independent finanial consumer protection mechanism curbing various predatory financial behaviors,implementing stricter protection measures for special groups,centralized liquidation for the OTC derivatives,as well as a living will to the shadow banks and so on.These machnisms and measures help achieve the goal of financial stability.At the same time,the Dodd-Frank Act changed the emergency authorization provided for in Article 13(3)of the Federal Reserve Act,the Federal Deposit Insurance Corporation is prohibited to provide temporary liquid before obtaining approval of the Congress,not to say deregulation measures taken by the Economic Growth,Deregulation and Consumer Protection Act.These aspects may affect the effectiveness of financial stability goals.It is of no doubt that any measures to relax financial regulation may increase the fragility of financial markets in the future.Based on the above analysis,some policy recommendations are brought for future financial risk prevention.