Dodd-Frank Act.

In plain English

The Dodd-Frank Wall Street Reform and Consumer Protection Act created new supervisory bodies, pushed many swaps onto clearinghouses, imposed tougher standards on the largest banks, and set up a consumer regulator with its own rulemaking power. It required large firms to file resolution plans describing how they could be wound down without a rescue, and it gave regulators authority to seize and unwind a failing financial company. It also mandated annual stress testing and restricted proprietary trading at banks with insured deposits. Much of the law was written as instructions to agencies, so its practical effect came through hundreds of separate rules issued over years. Congress later adjusted several thresholds, so which banks face which requirements has changed since passage.

01Why it matters

This law is why your mortgage disclosures look the way they do, why there is a federal agency taking consumer complaints about lenders, and why the largest banks publish stress test results.

02The math, step by step

Say a bank has $80 billion in assets. Under the original thresholds it would have faced the full package of enhanced standards. After later changes raised the line, a bank that size can sit outside the strictest tier while a $300 billion bank stays inside it.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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