Should The Dodd-Frank Wall Street Reform

There are a few exceptions to the Volcker Rule, but banks must also document their compliance with the exemption written.  At a minimum, the proposed rule would require that a banking entity's compliance program include describing and monitoring the entity's covered fund activities and investments, while identifying potential areas of non-compliance, and enforcing the compliance program effectively (Richards). With such a rigorous program, companies will have to continuous check if their debt securities meet up against the standards of the Volcker Rule, changing the classification of a security when it doesn’t comply with the act.

The government regulation of the financial industry by the Dodd-Frank Act was the most compelling topic of this class. A financial regulatory process was created which limits risk through the enforcement of transparency and accountability. The main objective of the Dodd-Frank Act was to provide regulation to banks that was more stringent. The FSOC was created as a result of the Dodd-Frank Act. The two main objectives of the FSCO was to stop the occurrence of another recession and to resolve persistent issues. The elimination of bailouts funded by taxpayers was another important element of this act. The CFPB also known as the Consumer Financial Protection Bureau was created as a result of the act. The consolidation of consumer protection responsibilities

Yes we need to have some form of regulation. The proposed regulation is not bad as it covers most of the recommendations discussed in this write up earlier. It reinforces the regulatory role as outlined earlier and requires improving the capital requirements as well as the risk management systems in place in financial institutions. At the same time the focus is mostly on large, complex financial institutions that have a systematic impact so it allows some flexibility particularly for smaller and medium size financial institutions.

more stringent regulations. After a careful examination of the Dodd-Frank, it can be shown that

Since 1933, the United States government has provided varying degrees of regulation designed to protect the average banking customer from the risks of investment banking. The Glass-Steagall Act, the Dodd-Frank Act, and the Volcker Rule were implemented to try to keep banks from investing consumer deposits into riskier securities but deregulation and lobbying have created instability.

The Dodd- Frank law on whistle-blowing bounty program is an upgrade from the Sarbanes- Oxley. The Sarbanes – Oxley whistle -blower program protected employees from getting retaliated upon by their employers when they report misconduct within the company they are employed. Dodd- Frank law took is a step further, an employee who reports financial misconduct are entitled to receive 10 percent to 30 percent of the fines and settlements if the conviction is upheld and the penalties exceed $1 million dollars (Ferrell, 112, 2013). The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law by President Obama in 2010 (Ferrell, pg. 110, 2013). The focal mission of the Consumer Financial Protection Bureau is to make markets for

The banks were bailed out in 2008 because the government wanted to buy $700 billion to buy distressed mortgage, and to take off debts on the banks books. The bailout created a bill called the Troubled Assets Relief Program. This means troubled banks have the right to submit a bid price to sell their assets to TARP as part of a reverse auction. This act helps the government know they did not spend a certain amount of money. The bank was bailed out by George Bush in October 3, 2008. The Volcker Rule affect the risky investment by having a hold on what type of trading that the banks do. This Act does not allow investment banks into trading with low quality assets, as in options, derivatives and

By signing the Volcker Rule into law on July 21, 2010, I should declare in regard to this reform package that President Barack Obama has, effectively, released a complex, ambiguous document. In addition, it represents a package of 963 pages long with 2,826 footnotes and 1,347 questions. In effect, on December 10, 2013, five federal agencies have technically approved the Volcker Rule. Moreover, these agencies include the Commodity Futures Trading Commission, CFTC, the Securities and Exchange Commission, SEC, the Federal Reserve, the Office of the Comptroller of the Currency, OOC and the Federal Deposit Insurance Corporation, FDIC. Furthermore, the Volcker Rule has been strongly hindering the banking industry in regard to the risk-taking

I believe the Frank-Dodd Act accomplishes what it is intended for because of the many changes banks now do their business. Banks should be kept as banking and not risking money that people trust them to save. Money is hard to earn and people want to put away some in order to have a good retirement. Before if you went overdraft at the bank they used to charge you an “overdraft fee” regardless you wanted them to approve it or not. Now you have the option of what many banks call “overdraft protection” where they still charge you the overdraft fee and cover your purchases. Now you have the choice to permit the bank. Before credit card application were

The banking industry as a whole after the stock market crashed was going bankrupt due to not being able to carry the “bad debt” that was created from using customer money to buy stock. Because the banks were out of money, they were unable to cover customer withdrawals from their bank, causing many bank customers to lose all of their savings. With the uncertainty of the future of the banking industry, many people withdrew all of their savings, which caused more than 9,000 banks to close their doors and go out of business (Kelly). Due to the effects of the Great Depression, and the collapse of the banking industry, the government created regulations to prevent similar failure in the future. For Example, the SEC, (or Securities Exchange Commission), which regulates the sell and trade of stocks, bonds and other investments was created as a result of The Great Depression. The FDIC (or Federal Deposit Insurance Corporation), was created to insure bank accounts so that that the consumer would be protected if the bank were to go out of business (Kelly). The Great Depression's effect on the banking industry led to many useful changes to the banking industry and helped restore confidence in banks in the American people.

In 2008, the housing market crashed and America fell into a recession. Many Americans lost their homes. Many investors lost large sums of money, and overall the economic recession hurt America as a whole. Today, we see that the stock market is more regulated than it was in 1929 with the Great Depression and 2008 with the Great Recession, but it is still not regulated as much as it previously was. In 1999, portions of the Banking Act of 1933, more commonly known as the the Glass-Stegall Act, were repealed. The repeal of the Glass-Stegall Act in 1999 sparked the Housing Crisis of 2005 and ultimately led to the Great Recession that America experienced in the 2000’s.

The federal government’s role is in regulating industries is to protect consumers and the market. There is an ongoing debate on whether the federal government should regulate the insurance industry as a result of the bailouts stemming from the Financial Crisis of 2008. Currently, state governments regulate the insurance industry. Proponents of federal regulation reason that states are inefficient in the duty of insurance regulation. Additionally, the federal government has economies of scale and may offer an increase in efficiency unlike state regulation. The federal government regulates industries due to inherent systemic risk to the country’s economic environment. Systemic risk is the risk of collapse of an entire financial system or market. (SOURCE) For example, banking institutions such as Lehman Brothers, Merrell Lynch, and Goldman Sachs were major contributors to the financial crisis in 2008 because these institutions were systemically significant to the market. The insurance industry and the core activities of the industry, however, were not a major contributor to near-collapse of the American economy. The federal government should not regulate the insurance industry because it does not possess a systemic risk to the market economy, states have the ability and resources to regulate, and federal regulation would result in unnecessary costs from the federal budget.

From the simple description of what happened during the financial crisis as mentioned above, it is clear that the use or rather the overuse of credit derivatives was the major cause of the collapse of the financial market. The creatively designed derivatives helped to hedge the risks off parties involved and eventually the party held accountable for the risk would get lost in all the complexity of each tranche. In May 2010, the Financial Times quoted Warren Buffett with the following: “Derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal to the financial system” (Lemer, 2010). This quote nicely reflects the fear of some market participants and observers that credit derivatives may threaten the stability of the financial system. The transactions of credit derivatives are not required to be disclosed by the market participants and this opaqueness in the system can easily lead to yet another collapse in the financial markets. Furthermore, there is no common method of documentation and thus control measures are only self-regulatory (Ayadi & Behr, 2009). Sometimes government heavily subsidizes the derivative markets making it easier for anyone to get credit derivatives cheaply. Almost one-third of OTC market trades require no margin or collateral requirements at all. Financial innovation has a bad reputation at the moment, because exotic derivatives were one of

The goal of financial regulation is to increase efficiency in the market, as well as enhance the market 's ability to absorb shock caused by financial instability. There are many reasons for financial instability, but it can be narrowed down to

The financial sector has used derivatives for several years. Governments have hence developed regulations to manage the economic instrument. The United States government controls the derivative market through federal agencies; for example, the Security Exchange Commission. The derivative laws aim at enhancing the transparency of the financial sector. This is through increased monitoring and usage of designated contract markets. The derivative laws have changed the market structure because of trade restrictions and exit of banks from the market. The Dodd-Frank Act should be implemented internationally to hinder instability in the global financial sector.