INTRODUCTION The Dodd-Frank Wall Street Reform and Consumer Protection Act was a direct response to the global financial crisis of 2008 and was put into effect on July 21st, 2010. The main purpose of the act was to reduce risk in the financial system to prevent a future financial crisis. In order to understand the Dodd-Frank Act and its effects, it is important to identify some of the key components behind the financial crisis. As such, a brief synopsis of the crisis will be given before delving into the implementation and effects of the Dodd-Frank Act. The key provisions to be focused on will be systemic risk regulation, the Volcker rule, and regulation of financial instruments. BRIEF SYNOPSIS OF THE FINANCIAL CRISIS Prior to the financial …show more content…
These financial instruments were originally used as products to insure the CDO’s they were based off of, however over time they were also used to speculate and bet against the health of the CDO’s. One of the largest suppliers of these products was AIG who faced severe issues as homeowners began to default. As many banks were left with these potentially worthless CDO’s backed by homes whose prices were collapsing, it was not long before these financial institutions were no longer at liberty of supplying credit to the public. Credit markets froze up, the financial system began to decline, and given the financial systems integration into the rest of the economy both domestically and abroad, much of the world economy began to …show more content…
That said the overarching objective of the act continues to be to reduce risk in the financial industry, and subsequently reduce the risk posed by “too big to fail” institutions to the rest of the economy. This focus will be the key provisions of the Act, the reasoning behind said provisions, their implementation, and the subsequent impact on the industry. In order to analyze the direct effects Dodd-Frank had on the industry, Goldman Sachs will be used as an illustration of the industry before and after Dodd-Frank. The key provisions in focus are: Systemic risk regulation, The Volcker Rule, Regulation of financial instruments (Securitization and
The Dodd-Frank Wall Street Reform and Consumer Protection Act’s policies haven’t really been implemented to the extent that regulators would have liked. Although the legislation takes many steps in addressing systematic risks in the United States financial system and improving coordination among regulators, some critics believe that alternative options might have been more effective. The coming years will give us a better understanding of how well the Dodd-Frank Act addressed these concerns.
The Patriot Act The Patriot Act was signed into law by President George Bush on the 26th October 2001. The Act is an Act of Congress whose title is a ten letter acronym which stands for “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism” (USA PATRIOT Act 2001). The Act was enacted 45 days following the September 11 attacks. The September 11 attacks on the World Trade Center in New York catalyzed the enactment of a legislation that would provide law enforcement with greater powers to investigate and prevent terrorist activities. The spirit of the act is founded on the notion of providing all that is required by law enforcement, within the limits of the constitution, to effectively combat the war on terror.
The Patient Protection and Affordable Care Act passed by President Barack Obama is a significant change of the American healthcare system since insurance plans programs like Medicare and Medicaid (“Introduction to”). As a result, “It is also one of the most hotly contested, publicly maligned, and politically divisive pieces of legislation the country has ever seen” (“Introduction to”). The Affordable Care Act should be changed because it grants the government too much control over the citizen’s healthcare or the lack of individual freedom to choose affordable health insurance.
Investment banks, Rating agencies and Insurance companies are key components of the financial market. In this presentation, I’m going to explain how these three key roles worked together to create the 2008 financial crisis.
This reform re-regulated the financial sector, tightened capital requirements on banks and overall placed major regulations on the financial industry. This reform also protects consumers with rules for abusive lending and mortgage practices. The main goal of the Wall Street Reform is to subject banks to a number of regulations and the possibility of being broken up due to the banks being “too big to
Flawed financial innovations: the implementation of innovations in investment instruments such as derivatives, securitization and auction-rate securities before markets. The indispensable fault in them is that it was difficult to determine their prices. “Originate to distribute securities” was substituted by securitization which facilitated the increase in ...
Congress’s role in strategic intelligence is oversight. “Congressional oversight refers to the review, monitoring, and supervision of federal agencies, programs, activities, and policy implementation.”[1] There is a congressional committee and a system in place in order for Congress to largely exercise this power. With that said oversight goes back to the early days of the republic which also includes activities and contexts of Congress. Some of the activities and contexts included are: investigative, appropriations, and legislative hearings; by committees, select committee’s special investigations, and reviews and studies by congressional support agencies and staff. The authority for congressional
Cited as one of the most influential and paramount financial regulation since 1930’s, Dodd-Frank act and Consumer Protection Act was passed by the Obama Administration in 2010 as a response to the financial crisis of 2008. It is not a hidden fact that after the repealing of Gramm-Leach-Bliley Act in 1999, commercial banks again started investing in unregulated derivatives, and this unregulated and least supervised investment channels of banks led to formation of cowboy financing, eventually leading to massive carnage in the US economy in the form of financial crisis of 2007-08. Learning from the mistake of past government, and to endow a supervisory eye on investments and risk channels of the bank, the Obama Administration passed the law in order to have a sweeping impact on the delivery of financial services in the United States. Therefore, Dodd-Frank Act is a legislative proposal to reform the entire financial service industry in the United States, in order to prevent financial crisis.
Does the Federal Accountability Act ensure the proper use of taxpayers money and blind trust funds? The Federal Accountability (FAA) Act became law in 2006 and is not effective. This due to the Senate Scandal in 2012. Even after this scandal, no further amendments were made to the Act. Where then is the transparency in the government? Can we really trust our government with taxpayers money? Where is that money going? The largest part of this problem seems to originate from the Senate Scandal.
Less than a quarter of uninsured Americans believe the Affordable Care Act is a good idea. According to experts, more than 87 million Americans could lose their current health care plan under the Affordable Care Act. This seems to provide enough evidence that the Affordable Care Act is doing the exact opposite of what Democrats promised it would do. On the other hand, this law includes the largest health care tax cut in history for middle class families, helping to make insurance much more affordable for millions of families. The Affordable Care Act has been widely discussed and debated, but remains widely misunderstood.
The Affordable Healthcare Act is defined as a health security by giving health insurance to the people that will expand coverage, lower healthcare costs, and enhance the quality of care for all Americans (What is ObamaCare). It improves insurance coverage by expanding Medicaid and by setting up exchanges on which people can purchase policies while receiving income-based subsidies to help cover costs. The Affordable Healthcare Act aids working mothers, retired men and woman, young adults and all working people by providing different healthcare in order to benefit the individual (C.H. 2014).
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.
In previous years the big financial institutions that are “too big to fail” have come to realize that they can “cheat” the system and make big money on it by making poor decisions and knowing that they will be bailed out without having any responsibly for their actions. And when they do it they also escape jail time for such action because of the fear that if a criminal case was filed against any one of the so called “too big to fail” financial institutions it...
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
In the early 1980’s Wall Street firms recognized that home mortgages could be used to create bond-like products, functioning similarly to bonds issued by governments and corporations. The “mortgage bond” bundled many individual home mortgages purchased from lenders and the income streams from monthly mortgage payments. The bundle was later termed a Collateralized Debt Obligation (CDO) and was sold by investment banks including Goldman Sachs, Merrill Lynch, Bear Sterns, JP Morgan, and Morgan Stanley on the bond market. In later years, banks generated larger profits by creating mortgage bonds for subprime mortgages, those mortgages with substantially higher credit default risk. A dangerous cycle was established as Wall Street banks bought more subprime mortgages, lenders placed more subprime loans, and individuals, enticed by artificially low interest rates during an initial fixed-term interest period, accepted mortgages that they could not