Streetwise Professor Criticizes Dodd-Frank Act

University of Houston Finance Professor Craig Pirrong detailed several "fundamental flaws" in the Dodd-Frank Act and consequent adverse effects on the financial markets. In a speech at the FOW (Global Investor Group) Trading event in Chicago (and in a recent blog post) Professor Pirrong provided an analysis of these effects.

• Too big to fail: Professor Pirrong argued that a significant objective of Dodd-Frank was to combat "too big to fail," but aspects of the legislation are actually favorable to larger-scale entities including the imposition of certain significant, fixed compliance costs. Further, contrary to the legislative intent, Dodd Frank has created excessive concentration of futures commission merchants, which results in additional systemic risk.