Legislation induced organizational inefficiency: The case of the federal reserve and the dodd-frank

Abstract

In 2010 the Dodd-Frank Law was passed in response to the 2008 recession. However, questions arose regarding the federal agenciesʼ ability to regulate the economy in general and the utility of financial regulations in particular. This work examines and discusses the challenges associated with the uncertainty of the administrative environment in which agencies have been drafting regulations in response to Dodd-Frank. A lack of administrative clarity as a result of Congressional politics led to regulatory capture and operational paralysis on the part of federal agencies tasked with implementing the Act. In this type of environment it becomes very difficult for regulatory agencies to be effective and competent when regulations have not all been drafted yet and legislation is continuously changing. This article critically examines the recent proposed changes to the Dodd-Frank Law. Specifically, it delineates the manner in which the legislative instability has impacted the Federal Reserve Bankʼs capacity to effectively implement the necessary rules for mitigating economic risks.

Citation

Johnson, A.M. (2015), "Legislation induced organizational inefficiency: The case of the federal reserve and the dodd-frank", International Journal of Organization Theory & Behavior, Vol. 18 No. 4, pp. 434-453. https://doi.org/10.1108/IJOTB-18-04-2015-B004