CLE Materials for Panel #1 - George Washington University Law ...

WILMARTH
4/1/2011 1:11 PM
2011] The Dodd-Frank Act 953
If the crisis has a single lesson, it is that the too-big-to-fail problem
must be solved. 1
–Federal Reserve Board (FRB) Chairman Ben S. Bernanke
Because of this law, the American people will never again be asked
to foot the bill for Wall Street’s mistakes.... There will be no more
taxpayer-funded bailouts. Period. 2
–President Barack Obama
The [Dodd-Frank Act] went from what is best to what could be
passed. 3
–Former FRB Chairman Paul Volcker
T
I
INTRODUCTION
he recent financial crisis—widely viewed as “the worst financial
crisis since the Great Depression” 4 —inflicted tremendous
damage on financial markets and economies around the world. The
* Professor of Law, George Washington University Law School. I would like to thank
Interim Dean Gregory Maggs for a summer research grant that supported my work on this
Article. I am also grateful for excellent research assistance provided by C. Scott Pollock, a
member of our class of 2010; Sarah Trumble, a member of our class of 2013; and
Germaine Leahy, Head of Reference for the Jacob Burns Law Library. I am indebted to
Cheryl Block, John Buchman, John Day, Ross Delston, Anna Gelpern, Jeff Gordon, Kim
Krawiec, Jeff Manns, Pat McCoy, Larry Mitchell, Heidi Schooner, and Cynthia Williams
for helpful comments and conversations. Unless otherwise indicated, this Article includes
developments through December 31, 2010.
1 Ben S. Bernanke, Chairman, Fed. Reserve Bd., Causes of the Recent Financial and
Economic Crisis, Statement Before the Financial Crisis Inquiry Commission (Sept. 2,
2010), available at http://www.federalreserve.gov/newsevents/testimony/bernanke201009
02a.htm.
2 Stacy Kaper, Obama Signs Historic Regulatory Reform Bill into Law, AM. BANKER
(July 21, 2010), http://www.americanbanker.com/news/obama-1022698-1.html (quoting
statement made by President Obama upon signing the Dodd-Frank Wall Street Reform and
Consumer Protection Act).
3 Louis Uchitelle, Volcker: Loud and Clear: Pushing for Stronger Reforms, and
Regretting Decades of Silence, N.Y TIMES, July 11, 2010, at BU 1.
4 Angela Maddaloni & José-Luis Peydró, Bank Risk-Taking, Securitization, Supervision
and Low Interest Rates: Evidence from the Euro Area and the U.S. Lending Standards 7
(European Cent. Bank, Working Paper No. 1248, 2010), available at http://ssrn.com
/abstract=1679689; accord Arthur E. Wilmarth, Jr., The Dark Side of Universal Banking:
Financial Conglomerates and the Origins of the Subprime Financial Crisis, 41 CONN. L.
REV. 963, 966 n.3 (2009); Ben S. Bernanke, Chairman, U.S. Fed. Reserve, Remarks at the
Swearing-In Ceremony, Washington, D.C. (Feb. 3, 2010), available at http://www.federal
reserve.gov/newsevents/speech/bernanke20100203a.htm.