Dodd-Frank Wall Street Reform And Consumer Protection Act And The Lesson To Our Country

With its influence constantly expanding since its outbreak, the US subprimecrisis has become a financial tsunami, which has already caused serious consequencesaround the world. The subprime crisis revealed the weak points of the UScontemporary financial regulatory system, and it has made the US government reflectupon their regulatory philosophy and system. The US government has been made todo new explorations on financial regulation and supervision by the subprime crisis.Dodd-Frank Wall Street Reform and Consumer Protection Act is one of the legislationtries aiming at large-scale reform of the financial regulation and supervision.Dodd-Frank Wall Street Reform and Consumer Protection Act reflects upon thedefects of the US financial supervision system. It proposed to set up FinancialStability Oversight Council and Consumer Financial Protection Bureau to strengthenthe regulation of financial derivatives and to end up the legal contents in which thefinancial agencies were always “too big to fall down”. All theses measures reflect theinnovation of American financial regulatory philosophy. The Act has been recognizedwithin financial industry as the most severe financial regulatory act ever since theGreat Depression of the20th century. The Act, aiming at filling the regulatory bugs ofthe financial crisis, has innovated US financial regulatory philosophy and reform theregulatory system. As a result, the US financial supervision and regulatory system, aswell as the industry pattern, which has significant influence on the US financialindustry and global financial environment. However, any single design could not beperfect, so the Dodd-Frank Act also has its imperfection. For example, it does notthoroughly get deal with regulatory arbitrage of financial agencies, imposesrestrictions on comprehensive management progress of the banks, and neglectsself-discipline and supervision. In consequence of the imperfections, the expectedeffectiveness of the Act has been greatly decreased. So the Act still needs to be furtherimproved in the future.Because China has not fully opened its financial market, itsfinancial system and the real economy narrowly escaped the heavy blow of the crisis.However, we should clearly realize that there are still some problems with ourfinancial regulation and supervision, such as incomplete laws and mechanism,singleness of regulatory manners. If we do not quicken our speed to improve it, wewill not be so lucky when the next financial crisis comes. So based on its national situation, China should refer to the advanced legislation experience of other countriesso that she can find out a suitable way of her own national situation.