To their credit, the authors of the Dodd-Frank Act attempted to reduce this risk by building in a number of features aimed at helping our system of financial oversight adapt over time to changes in the financial environment.
Notably, a central element of the legislation is the requirement that the Federal Reserve and other financial regulatory agencies adopt a socalled macroprudential approach – that is, an approach that supplements traditional supervision and regulation of individual firms or markets with explicit consideration of threats to the stability of the financial system as a whole.