What major financial reform was introduced by the Dodd-Frank Act?

The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in response to the 2008 financial crisis, primarily aimed to enhance the stability and transparency of the financial system. One of the notable reforms introduced by the Dodd-Frank Act was the enhancement of transparency in over-the-counter (OTC) derivatives markets.

Prior to the Dodd-Frank Act, many derivatives transactions occurred in a less regulated environment, potentially leading to a lack of accountability and increased risks within the financial system. The Act mandated that most derivatives transactions be reported to trade repositories, thus increasing visibility and oversight of these financial instruments. This transparency helps regulators monitor systemic risks and enables better-informed decision-making by participants in the financial markets.

In contrast, the other options do not accurately reflect the major initiatives of the Dodd-Frank Act. While private equity funds and mutual funds are important components of the financial landscape, the Act did not create private equity funds nor did it specifically streamline regulations for mutual funds. Additionally, the Dodd-Frank Act did not address corporate tax rates, which fall under fiscal policy rather than regulatory reform in financial markets. The focus on improving transparency for OTC contracts was a significant step toward greater regulation and oversight in the wake of the financial crisis