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Dodd-Frank Is a Pigouvian Regulation
Levine, Aaron M Macey, Joshua C.
Levine, Aaron M
Macey, Joshua C.
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Abstract
Almost eight years after the passage of Dodd-Frank, financial institutions remain large, complex, and interconnected. Academics and policymakers across the ideological spectrum largely agree that Dodd-Frank has imposed substantial compliance costs on systematically important financial institutions (SIFis) without solving the problem that they are too big to fail. This Note argues that Dodd-Frank's compliance costs have actually served an important regulatory purpose. By analyzing the spinoffs and divestitures that have occurred at eleven SIFis since Dodd-Frank went into effect in 2010, this Note documents the extent to which the Act's compliance costs have led SIFis to shed business lines of their own accord.