Dodd-Frank: Consumers’ Friend or Another D.C. Con Job?

David D. Schein^* and James D. Phillips^**

ABSTRACT

In the shadow of the worst economic recession in recent memory, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) was passed by Congress and signed into law by President Obama. This complex law was presented as the cure to just about every conceivable financial problem in the country. It promised to help consumers in multiple ways. Two of the best-known aspects of the Act are the Consumer Financial Protection Bureau (the “CFPB”), and the Financial Stability Oversight Council (the “FSOC”). The first was to protect consumers from being victimized by banks, lenders, and other financial services firms. The second was to prevent another massive taxpayer bail-out of private firms such as the AIG bailout. In light of the recent court rulings against both, a U.S. Appeals Court ruling in PHH Corp. v. CFPB and a Federal District Court determination that MetLife was not properly considered “too big to fail,” it is fair to question whether Dodd-Frank actually accomplishes anything for the consumers it was supposed to protect. This paper examines both the court decisions involving Dodd-Frank and the results reportedly produced by them in light of prior legislation in many areas covered by the Act.

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* Director of Graduate Programs and Associate Professor, Cameron School of Business, University of St. Thomas, Houston, TX, USA.

** Senior Associate Dean, Professor of Management and Public Administration, School of Management, Marist College, Poughkeepsie, NY, USA.