Four years after President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law, polls suggest most Americans think it hasn't done enough to protect them from a repeat of the 2008 crisis, a disaster from which the global economy has yet to fully recover. They're right. At its core, the Dodd-Frank Act was supposed to work like a three-stage containment system. Better monitoring and limits on risk-taking would make accidents less likely. If financial institutions did get into trouble, added capital would make them more likely to survive. If they nonetheless failed, advance planning and new resolution mechanisms would allow them to do so without bringing down the financial system and the economy. Regulators have yet to complete any level of this fail-safe system.
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