Dodd-Frank: Accretion of Power, Illusion of Reform

Document Type


Publication Date

Fall 2015


The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank or DFA) gained passage on the rationale that it would help the United States avoid future financial crises by creating new bureaucracies to fill regulatory gaps purportedly responsible for the crisis in 2008. This paper challenges both prongs of the crisis-prevention rationale: the “regulatory gaps” argument and the “beneficent new bureaucracies” contention. Citing pivotal DFA provisions, I describe the broad powers conferred on new federal bureaucracies: the Financial Stability Oversight Council, Office of Financial Research, and Consumer Financial Protection Bureau. I also examine changes to the federal housing finance bureaucracy made by the DFA. The goal is to clarify the unprecedented authority and reach of these new bureaucracies-the DFA’s potent central core-not to analyze the statute’s full sweep. The evidence provided throughout is actual statutory law enacted before and after passage of the DFA. That evidence shows that the statute, although presented as an instrument of reform, has chiefly increased government power, consistent with Robert Higgs’s (1987) analysis of the link between crisis and the growth of government.

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