Banking Practice Exam

The Dodd-Frank Act was primarily enacted in response to the 2008 financial crisis and included a range of measures aimed at improving transparency and accountability within the financial system. One of its key goals was to reduce systemic risk and prevent another crisis by increasing regulatory oversight of financial institutions.

The act created extensive reporting requirements for banks and financial companies, mandating that they disclose more information about their risk profiles, financial products, and operational practices. This increased disclosure plays a critical role in helping regulators monitor the financial system more effectively and allows consumers and investors to make more informed decisions. The emphasis on transparency also supports market integrity by providing a clearer understanding of the activities and risks associated with various financial institutions.

While other acts mentioned may address aspects of the financial system, they do not have the same comprehensive focus on transparency initiated by the Dodd-Frank Act. The Gramm-Leach-Bliley Act, for example, primarily dealt with the repeal of the Glass-Steagall Act and allowed commercial banks, investment banks, and insurance companies to consolidate. The Troubled Asset Relief Program was more of a bailout mechanism for financial institutions than a transparency reform, and the Sarbanes-Oxley Act, while it does address corporate governance and accountability, is more focused