What is the purpose of the Dodd-Frank Act?

The Dodd-Frank Act was enacted in response to the financial crisis of 2008 and its primary purpose is to enhance consumer protection within the financial services industry. This legislation aimed to create a more transparent and accountable financial system, which includes provisions designed to safeguard consumers from abusive practices. Key components include the establishment of the Consumer Financial Protection Bureau (CFPB), which is tasked with overseeing financial products and safeguarding consumers against deceptive practices.

In addition to improving consumer protection, the Dodd-Frank Act also introduced reforms to increase the regulation of financial markets, aiming to prevent another crisis like that of 2008. While it does involve regulations regarding financial derivatives and some aspects of bankruptcy, the strongest and most emphasized goal of the Act is to provide enhanced protection for consumers in their financial transactions.