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Assessing the Impact of Capitol Hill's Financial Regulatory Reforms on Lending

July 15, 2010

By Kevin L. Petrasic

Shortly after the Senate passes the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), expected sometime in the coming weeks, the president will sign into law the most comprehensive set of financial system restructuring reforms since the myriad reforms following the Great Depression.

Although the underlying context and character of Depression-era laws remain largely intact and continue to provide the foundation for our current financial regulatory system and oversight, the overall thrust of the Dodd-Frank overhaul has important implications for our banking system that warrant closer analysis. The new Dodd-Frank provisions include refinements and updates, and in the case of the Volcker rule, a reversion back, to Great Depression era laws.

Among the reforms are modernization provisions to existing laws to catch up with a rapidly changing and evolving financial system. Other reforms establish entirely new regulatory regimes, including in areas such as systemic risk regulation, over-the-counter (OTC) derivatives market oversight, and federal consumer protection.