Policy Documents

The Federal Reserve's Expanding Regulatory Authority Initiated by Dodd-Frank

November 13, 2013

odd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) significantly expanded the regulatory authority of the Federal Reserve Board of Governors (the Board) over banking institutions, financial firms, and their subsidiaries.

Dodd-Frank enhanced the Board’s authority over bank holding companies (BHCs), foreign banks, and subsidiaries of these entities.

Dodd-Frank gave the Board new authority over several types of institutions. The Board now has direct or back-up authority over certain financial market utilities (FMUs) and payment, clearing, and settlement institutions designated as systemically important by the Financial Stability Oversight Council (FSOC), an entity created by Dodd-Frank. It also now has authority over nonbank firms “predominantly engaged in financial activities” that are designated as systemically important financial institutions (SIFIs) by the FSOC, including subsidiaries of these firms. Authority to regulate thrift holding companies, supervised securities holding companies, and the subsidiaries of these entities was also transferred to the Board.

Dodd-Frank removed some of the Board’s regulatory authority, primarily its supervisory authority over consumer credit products such as mortgages, car loans, credit/debit cards, etc. This authority was transferred to the newly created Bureau of Consumer Financial Protection (CFPB).

Dodd-Frank left unchanged the Board’s regulatory authority over state-chartered member banks, foreign operations of US banking organizations, and Edge Act and agreement corporations. The Board’s mandates are overlaid with a new responsibility for the stability of the US financial system.