The Dodd-Frank Wall Street Reform and Consumer Protection Act (Act) is one of the most comprehensive pieces of legislation reforming federal financial institutions regulation in U.S. history.The Act affects a wide range of providers of financial products and services, as well as business and consumer customers.

Among the main features of the Act are:

  • Imposing federal regulation on systemically important nonbanks
  • Requiring new regulatory standards for large bank holding companies and systemically important nonbanks
  • Imposing restrictions under the “Volcker Rule” on banking entity proprietary trading and sponsorship of, and investment in, hedge funds and private equity funds
  • Authorizing federal takeovers of nonbanks and bank holding companies that pose a significant threat to U.S. financial stability
  • Establishing a new federal regulatory agency focused on consumer protection in regard to financial products and services
  • Overhauling the mortgage lending industry, including strong incentives for originators to offer mortgage loan products that meet certain federal standards
  • Developing a new regulatory structure for swaps and derivatives
  • Changing the legislative structure related to credit rating agencies and requiring risk retention in connection with certain asset-backed securities
  • Imposing new requirements involving investor protection, the registration of investment advisers, securities disclosures and securities enforcement
  • Creating a federal office focused on the insurance industry, potentially leading to broad federal regulation of the insurance industry

The Act, in many respects, is only a first step in achieving an enhanced federal regulatory structure. In many instances, the impact of the Act will ultimately be determined by a rulemaking process or the results of a congressionally-mandated study.