Reference no: EM133331629

Case Study: The Dodd-Frank Act was a major form of reform following the 2008 financial crisis and established many limits to large financial institutions. Many have found that these "too big to fail" institutions are doing more harm than good in terms of keeping the economy stable. When large companies begin opporating in a means that cannot be stopped (whether by acquiring smaller firms or simply by the manner in which they create new policies), they often find themselves involved in cases with the federal government.

In the case of MetLife, the government designated "MetLife as a systematically important financial institution" in 2014. This ruling was a part of the Dodd-Frank Act which sought out to find firms that would "wreck the U.S. financial system if they experience distress". Obviously this type of ruling brings heighten scrutiny on any firm with its designation to ensure all practices will not lead to financial ruin. Since then, MetLife's executions began propositions to unclasify them as a systematically important financial institution. Finally, in March of 2016 the District Court rescinded this ruling which allows the company to operate in less controlled manners.

However, the overarching prinicples of the Dodd-Frank Act are still in place for all large financial institutions- whether they have the label or not. Given this, the past 15 years have been filled with new regulations and guidance that each institution must follow. However, I believe these types of regulations are necessary to keep companies in check and responsible for their actions. While one company's behavior will not disrupt our entire economy, if all companies are held to a higher standard we should be able to avoid many of the events that led to such a deep recession in 2008.

Question: After reading the opinion above, what is your response? What may be some risks or drawbacks? Please be detailed in your opinion.