Dodd-Frank and the Great Debate: Regulation vs. Growth

Abstract

The history of regulation in America is as old as the republic itself. Since colonial times, Americans have struggled with the conflict between the desire for individual freedom and economic growth, and the need for rules and structure in a civil society. The evolution of the United States from a largely agrarian, libertarian society to one with strong industrial and consumer components that are regulated by the federal government has been greatly influenced by Progressive ideas, not only in financial services but in all aspects of economic life. The swing of public policy from periods of strict regulation to eras of greater permissiveness has enormous implications for economic growth. This paper examines the development of regulation in the US from the 19th century up to the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) in 2010, from both a political and economic perspective.

Keywords: Dodd-Frank Act, Financial Regulation, Progressive, Louis Brandeis, Benedict v. Ratner, fraud

JEL Classification: G18, G20, G23, G28, K22, N12, N22, N24