Yesterday I listened to a lecture on corporate governance and the failures of the Dodd-Frank Act during an event put on by the Federalist Society. The lecture was given by Professor Charles Elson from the University of Deleware. Mind you corporate governance isn’t exactly something I spend a lot of time thinking about specifically, but there was one very interesting takeaway.
According to Professor Elson, the checks and oversight systems established by the Dodd-Frank Act created a paper tiger. The end result of this is that not only were the checks ineffective, but by following the oversight requirements of the Act, an affirmative defense was created for bad actors. Whereas before the Act there was a private course of action that could be levied against corporations, those same corporations can now point to the fact that they complied with the Act to protect them from punishment.
