The Dodd-Frank Act's changes to regulation of insured depository institutions and their holding companies

The Dodd-Frank Act represents a paradigm shift in the United States approach to bank regulation. For much of the last four decades, US bank regulatory policy was guided by two tenets: the first being faith in the market and its ability to discipline banking organization risk taking and other potentially problematic activities; and the second being a belief that diversification of banking organization activities would lead to a commensurate diversification and reduction of bank risk profiles. Guided by the experiences of banking organizations, federal regulators, and consumers in the financial crisis, Congress has taken an entirely different approach in the Dodd-Frank Act. Rather than trusting markets to lessen risks, the Dodd-Frank Act revises the federal bank agency structure and empowers federal bank regulators in myriad ways to devise rules to prevent risky activities and to protect consumers.