One of the major unintended impacts of the Dodd-Frank Act has been on credit unions and community banks. These banks weathered the credit crisis and lost only 6% of their share of banking assets between 2006 and mid-2010. A recent Harvard study indicates that this decline accelerated to 12% since the passage of the Dodd-Frank in July 2010. [a] While the community banks’ earnings increased by 12% to $5.3 billion by mid 2015 the number of these banks had declined according to Federal Deposit Insurance Corporation. The number of banks with assets under $1 billion has declined from around 7500 in 2010 to less than 6000 since Dodd-Frank came into effect. [b] Increased compliance costs due hiring of new personnel to interpret the new regulations compelled these banks to cut down on customer service amongst other things. The law hurt them disproportionately and forced them to consolidate. Regulatory economies of scale drive the process of consolidation. A larger bank is often more equipped at handling increased regulatory burdens …show more content…
Major banks are cutting back on some of their legally permitted operations, such as- market making, and that has led to liquidity issues in the bond markets. Proprietary trading could become unregulated if more banking activities continue moving towards the shadow banking system. This would essentially defeat one of the main purposes of Volcker Rule. [d] The third major unintended consequence has been the degree by which the Federal Reserve has become the main regulator of the finance industry. In order to discourage future bailouts similar to the ones during the financial crisis, the Dodd-Frank Act limited the Fed’s emergency powers. However the liquidity and capital standards now imposed by Fed has purportedly become one of the most important regulatory developments of the Dodd-Frank Act.
The new Volcker Rule forbids the proprietary trading and limits the proportion of the hedge fund and private equity fund to no more than 3% for the banks, thus the banks worry about the Volcker rule will lead them to spend 10 million dollars to market making, insurance and risk hedging.
The Health Insurance Portability and Accountability Act of 1996 was created to improve the efficiency and effectiveness of the health care system. There are numerous rules that fall under this act, which include Privacy, Security, Enforcement, Omnibus, and Breach Notification Rule. All of which set a national standards of protection, confidentiality, and integrity. HIPAA is to protect those who are patients in any medical facility.
The Health Insurance portability and Accountability Act was first introduced in 1996. This law became nationally known as HIPAA. “This law is made up of five sections. Titles I, III, IV, and V address regulation of the continuity and renewability of employee health insurance, promote the establishment and use of medical savings accounts, and set standards for the coverage of long-term care.” (Charles R. McCornell, 2015, pg 513) HIPAA set guidelines for a lot of aspects in the American health care system. “This law addresses a variety of issues related to health care. HIPAA required the US Department of Health and Human Services to adopt standards regarding the electronic exchange, privacy, and security of health information.” (Health Insurance
Interesting post this week. In your opinion was there a great need for a separate need to have control over intelligence oversight? Historically, how could have civil liberties and questionable intelligence activities been protected and detected? “The impact of Gang of Eight notifications on the effectiveness of congressional intelligence oversight continues to be debated” (Erwin, 2013, 6). Over the years has Congressional Oversight provided the required influence to make the Intelligence Community (IC) effective? Protecting civil liberties and preventing questionable intelligence activities is of importance to the Congressional Oversight (Gill 2009, 83, 91). In your opinion, is Congressional Oversight providing the necessary protection to
The exterior was well maintained, free of litter and also had a good appearance. Parking was ample and convenient.
Established in 1914, the Federal Trade Commission is an independent regulatory agency in the United States. Its main role is to create a fair and competitive business trade in the United States. Originally established under President Wilson’s administration, the FTC was created to protect the public and businesses from unfair business trade and to formulate a strong and reliable relationship between consumers and businesses. Members of the Federal Trade Commission are appointed by the President and authorized by the Senate. Generally, the FTC is consisted of five appointed members that are sworn in for seven-year terms. However; the current structure of the FTC has only four appointed members: one chairman and three commissioners. Currently, FTC has one vacant commissioner position (FTC.gov, 2014). The current organizational chart of the FTC is constructed as follows: Edith Ramirez (Chairwoman), Julie Brill (Commissioner), Maureen Ohlhausen (Commissioner), and Joshua D. Wright (Commissioner) The Federal Trade Commission also consists of various offices, each constructed to focus on different areas of regulation and rulemaking.
This act affects future government spending and bailouts, as well as acting as an attempt to restrict the impacts of future recessions through the prevention of “the excessive risk-taking that led to the financial crisis” (Wall Street Reform: The Dodd-Frank Act, par. 2) in Wall Street. Not only does this act work as a very wide reaching reform of Wall Street, it also provides consumer protection in regards to housing loans, credit card fees and rates, and reforms to banks charging overdraft fees. This act was put into place as a result of the automotive industry bailout in 2009, and its purpose is to control government deficit in times of recession by not acting as a safety net to extremely large companies that fail. In addition, the results of this legislation are aimed to “build a safer, more stable financial system” (Wall Street Reform: The Dodd-Frank Act, par. 2). Overall, with the federal government forcing Wall Street companies to take responsibility for their own risk taking, stating that the government is no longer a potential safety net for large companies, and providing greater consumer protection in regards to housing loans, credit cards fees, and bank overdraft fees, the Obama administration appears to be attempting to prevent future recessions, as well as decreasing the deficit during the recessions that will
The Affordable Care Act (ACA) was passed into law to provide greater healthcare coverage to millions of Americans. The passage of the ACA bill into law was to eliminate the gap between existing health care disparities among the undeserved, underprivileged and minority groups. However, the ACA have not abolish health care disparities but only reduce them to some extent. For instance, The ACA mandates that both Medicaid and insurance plans cover lifesaving preventive services recommended by the US Preventive Services Task Force, including colorectal cancer (CRC) screening and choice between colonoscopy, fecal occult blood testing (FOBT) and flexible sigmoidoscopy (Green, Coronado, Devoe, & Allison, 2014).
Capitalism is almost too good to be true, but there comes a time when government intervention becomes a necessity, especially after a series of scandals in corporate businesses that destroyed the trust of investors and consumers. The government finally had to come up with a solution due to the fact that the free market is no longer efficient on its own. Established in 2002, the Sarbanes-Oxley Act, also known as Public Accounting Reform and Investor Protection Act, is a federal law that aims to improve corporate governance by increasing compliance regulations and financial transparency in hopes of preventing big scale corruptions such as the Enron Scandal from happening again. The Enron Scandal, along with other corruption and fraud in the businesses
Between the years 2000 and 2002 there were over a dozen corporate scandals involving unethical corporate governance practices. The allegations ranged from faulty revenue reporting and falsifying financial records, to the shredding and destruction of financial documents (Patsuris, 2002). Most notably, are the cases involving Enron and Arthur Andersen. The allegations of the Enron scandal went public in October 2001. They included, hiding debt and boosting profits to the tune of more than one billion dollars. They were also accused of bribing foreign governments to win contacts and manipulating both the California and Texas power markets (Patsuris, 2002). Following these allegations, Arthur Andersen was investigated for, allegedly, shredding
...y with abundant liquidity: a new operating framework for the Federal Reserve. Policy Brief PB14, 4.
The "subprime crises" was one of the most significant financial events since the Great Depression and definitely left a mark upon the country as we remain upon a steady path towards recovering fully. The financial crisis of 2008, became a defining moment within the infrastructure of the US financial system and its need for restructuring. One of the main moments that alerted the global economy of our declining state was the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and after this the economy began spreading as companies and individuals were struggling to find a way around this crisis. (Murphy, 2008) The US banking sector was first hit with a crisis amongst liquidity and declining world stock markets as well. The subprime mortgage crisis was characterized by a decrease within the housing market due to excessive individuals and corporate debt along with risky lending and borrowing practices. Over time, the market apparently began displaying more weaknesses as the global financial system was being affected. With this being said, this brings into question about who is actually to assume blame for this financial fiasco. It is extremely hard to just assign blame to one individual party as there were many different factors at work here. This paper will analyze how the stakeholders created a financial disaster and did nothing to prevent it as the credit rating agencies created an amount of turmoil due to their unethical decisions and costly mistakes.
The Teams at First Community Financial The financial industry is the pulse of our economy. When banks make poor financial decisions, it trickles down affecting everyone, at every level. After the housing bubble burst around the years between two thousand five and two thousand eight many of our nation’s largest banks declared bankruptcy, the federal government began holding company Chief Executive Officers accountable for their company’s financials. They enacted stricter regulations in an attempt to avoid another financial crisis as the one we experience previously. Today, banks must adhere to incredibly strict criteria when evaluating the financial risks they take with their clientele.
During the 1920s, approximately 20 million Americans took advantage of post-war prosperity by purchasing shares of stock in various securities exchanges. When the stock market crashed in 1929, the fortunes of many investors were lost. In addition, banks lost great sums of money in the Crash because they had invested heavily in the markets. When people feared their banks might not be able to pay back the money that depositors had in their accounts, a “run” on the banking system caused many bank failures. After the crash, public confidence in the market and the economy fell sharply. In response, Congress held hearings to identify the problems and look for solutions; the answer was found in the new SEC. The Commission was established in 1934 to enforce new securities laws that were passed with the Securities Act of 1933 and the Securities Exchange Act of 1934. The two new laws stated that “Companies publicly offering securities must tell the public the truth about their businesses, the securities they are selling and the risks involved in the investing.” Secondly, “People who sell and trade securities must treat investors fairly and honestly, putting investors’ interests first.”2
As we are moving to the end of the course, we want to present you with the Federal Reserve System (Fed), which is the central bank of the USA. We are going to explore the roles of Fed in regularizing the economy, its function, and also the tools used in doing that. We will learn how central banks regulate the banking system and how they manage money supply in economies. We will also be presented to the financial crises lessons we can be able to understand the importance of the regulatory system; and then, we answering questions such as: