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…
compared to a smaller bank which causes the cost of being a community bank to be higher. The community banks traditionally cater to a large chunk of key segments of the commercial bank lending market, such as- small business and agricultural loans. [c] The consumers are now increasingly facing issues in form of reduced products and service offerings by these banks. Another unanticipated impact of the Dodd-Frank Act is that Volcker Rule has nudged many essential banking functions towards the shadow banking system.
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.
[d] The proposals of breaking up big banks entail more cons than pros, and can potentially be counterproductive. It is my belief that allowing Dodd-Frank and other reforms to work as intended would be a more effective approach than breaking up the major financial institutions. Most arguments in favor of breaking up these banks fail to provide a convincing argument on why being big is bad. There exists a general misconception that another financial crisis can be avoided by breaking up big banks. If history is any indication- there will be another financial crisis, and that there is no infallible solution to prevent such crises from happening based on the number or size of banks in a country. Economies of scale make sense for a bank to grow large.
Under HIPAA, are you legally allowed to view this patient’s medical information? Why or why not?
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.
In October of 1929, the American economy took a huge hit from the stock market crash. Since so much people had invested their money and time in the banks, when the banks closed many had lost all of their money and were in the deep poverty. Because of this, one of my first actions of the New Deal was the Federal Deposit Insurance Corporation (FDIC). Every bank in the United States had to abide by this rule. This banking program I launched not only ensured the safety and protection of deposits made my users of banks, but had also restored America’s faith in banks, causing people to once again use banks which contributed in enriching the economy. Another legislation I was determined to get passed...
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 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
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.
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.
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
...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.
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:
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.