Banking Practice Exam

The Dodd-Frank Act is the legislation that was specifically put in place to implement various reforms aimed at preventing future banking crises in the wake of the 2008 financial meltdown. This act introduced comprehensive regulations in the financial industry, focusing on increasing transparency, reducing risks in the banking system, and improving consumer protection.

One of the key components of the Dodd-Frank Act is the establishment of the Consumer Financial Protection Bureau (CFPB), which aims to oversee and enforce consumer finance laws. Additionally, the act introduced stringent requirements for larger financial institutions, including stress testing and stricter capital requirements, to ensure they could withstand economic downturns.

Moreover, the act sought to address issues related to the "too big to fail" banks, imposing measures that would mitigate systemic risks and promote financial stability. Overall, the Dodd-Frank Act serves as a crucial piece of legislation designed to bolster the regulation of the banking sector and protect the economy from future disruptions similar to those observed during the 2008 crisis.