Question

Many believe that insufficient supervision of the financial sector was partly responsible for the recent financial crisis. Consequently, Congress passed the ___ Act.

a) Sarbanes-Oxley
b) Dodd-Frank
c) Glass-Steagall
d) Gramm-Leach-Bliley

Answer 1

Congress passed the Dodd-Frank Act to reform the financial system following the financial crisis that led to the failure of prominent institutions like Lehman Brothers. It is different from the Sarbanes-Oxley Act, which was designed to prevent accounting fraud. Hence, the correct answer to the question is option b) Dodd-Frank.

Step-by-step explanation:

In response to the question concerning legislation passed following inadequate oversight of the financial sector, which contributed to the financial crisis, Congress enacted the Dodd-Frank Act. This Act aimed to provide significant reforms to the financial system in the aftermath of the collapse of major financial institutions such as Lehman Brothers, Wachovia, and Federal National Mortgage Corporation (Fannie Mae). It is distinct from the Sarbanes-Oxley Act, which was passed in 2002 in the wake of accounting scandals to protect investors by increasing confidence in financial reporting by public companies.