- Hardcover: 240 pages
- Publisher: Wiley; 1st edition (December 7, 2010)
- Language: English
- ISBN-10: 0470942754
- ISBN-13: 978-0470942758
- Product Dimensions: 6.1 x 1 x 9.1 inches
- Shipping Weight: 14.9 ounces (View shipping rates and policies)
- Average Customer Review: 15 customer reviews
- Amazon Best Sellers Rank: #439,038 in Books (See Top 100 in Books)
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The New Financial Deal: Understanding the Dodd-Frank Act and Its (Unintended) Consequences 1st Edition
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From the Inside Flap
After watching the government bail out Bear Stearns and AIG in 2008, and pump well over one hundred billion dollars into Citigroup, Bank of America, and the other largest banks the same year, Americans realized that the existing regulatory framework did not work. The Dodd-Frank Act, which President Obama signed into law in July 2010, was Washington's answer. The legislation created an entirely new set of rules for both the instruments and the institutions of contemporary finance. Although the reforms were desperately needed, they were drafted by the same people who designed the bailouts of 2008, and it shows.
In The New Financial Deal: Understanding the Dodd-Frank Act and Its (Unintended) Consequences, David Skeel explains where the legislation came from, tracing its assumptions back to the 2008 crisis and offering an inside account of the key moments in the legislative process. He analyzes each of the main components of the Dodd-Frank Act, explaining how they will work and showing that the new regulatory framework depends on precisely the qualities that Americans found so offensive about the bailouts of 2008: special treatment of the largest financial institutions and ad hoc intervention in the event of trouble. Skeel's assessment is not entirely pessimistic, however. He argues that a few features of the Dodd-Frank Act are genuine improvements, such as its regulation of financial derivatives, and he outlines several simple bankruptcy reforms that would curb the worst excesses of the new partnership between the government and the largest financial institutions.
From the Back Cover
Praise for The New Financial Deal
"While we wait and wonder what the true denouement of the Dodd-Frank Act will be, we are blessed with Professor David Skeel's timely, informative, and lucid explanation of the ins and outs of the new law. For readers trying to understand what Dodd-Frank will likely mean for Wall Street's futureand for oursSkeel skillfully dissects the Act's nuances and intricacies and provides regulators a road map for how to make sure Wall Street doesn't double-cross us again anytime soon. It's a must-read."
From the Introduction by William D. Cohan, bestselling author of House of Cards and The Last Tycoons and an upcoming title on Goldman Sachs to be published in 2011
"The New Financial Deal is mandatory reading for all those interested in the financial markets and the global economy. David Skeel is to be commended for casting sunlight, the best disinfectant, on the events preceding the enactment of the Dodd-Frank reform, its efficacy, and thepotential consequences, intended and unintended."
From the Foreword by Harvey R. Miller, Senior Partner at Weil, Gotshal & Manges LLP and the lead bankruptcy attorney for Lehman Brothers Holdings Inc., et al.
"In this work, David Skeel leads us through the most important elements of the complex 2,300 page Dodd-Frank Act, not just making its principal elements clear but also providing us with his own, invariably balanced, judgments. Readers might not agree with his every view, but will not be in doubt about why and how he got there."
Peter J. Wallison, Arthur F. Burns Fellow in Financial Policy Studies, American Enterprise Institute
Top customer reviews
Skeel's main argument is to give bankruptcy a chance -- when large, complex banking organizations start to teeter, Skeel argues, they should prepare for and eventually take advantage of the bankruptcy process. Skeel explores the arguments against bankruptcy, and finds them largely without depth and merit. Bankruptcy, Skeel argues, is the best way to allow private firms--regardless of how complex--to fail without imposing their losses on to the rest of us.
One of the greatest strengths of the book is Skeel's willingness to peer into the future of the Act and make predictions about how the Act will--or will not--fulfill its goal of ending taxpayer bailouts. Here, the reader need not agree with Skeel's bankruptcy preference in order to benefit from his analysis. Even Messrs. Dodd and Frank themselves can hardly dispute the fact that bankruptcy was not seriously considered as a viable option for allowing large, complex banks to fail. Skeel asks the hard questions about why this was so, to the benefit of anyone who thinks seriously about these issues.
The book is highly critical of the Dodd-Frank legislation but still allows some light to shine through, in fact,
The Dodd-Frank law is it's own worst enemy.
Although positive in it's original design, Dodd-Frank is, in it's own right, an "Original Sin" since it removes the power of the "Free Commerce Clause" of the U. S. Constitution from the banks and their stockholders who are in business to make money and retain shareholder value.
Skeel attempts to demonstrate how a few simple, but positive changes, would make the law more palatable but still does not understand that restraining and over-controlling "free commerce" simply defeats both "The Constitution" and "The American Dream".
The book identifies several parts of the legislation that could add serious damage to our fragile economy; namely (1) Government intervention in the business of financial institutions and overregulation of the financial industry which might bring about a second and more serious recession and (2) a failure to truly offer fair and balanced regulations that are rules-based rather than the government's over zealous interventions that can destroy the industry.
Skeel discusses the existing financial crisis and how it led to Dodd-Frank along with the controlled debates that encompass the major provisions of the legislation and then sorts out the controlling reform sections for each category.
(a) Consumer Protection and Regulation
(b) Banking, including a Financial Stability Oversight Council, non-banking financial institutions, and the "Volcker Rule"
(c) Derivatives, especially clearinghouse and exchange-trading requirements and
(d) bankruptcy and bailout resolution authority
Skeel's focus appears to be the Obama administration's leaning towards over-controlling the existing situation especially the bailout of Wall Street by Obama and Geithner.
It is both a fast and excellent read but leaves many unanswered questions.