Regulating Financial Industries

The US Securities and Exchange Commission (SEC) is the US federal agency that holds the primary mandate to enforce federal securities laws and regulations to control the securities industry and the country’s stock exchange and regulation of all activities and organizations including the US electronic securities market. The SEC is committed to promoting a market environment that yields public trust characterized by integrity to attain its mission of protecting investors through maintenance of fair and efficient markets through facilitation of capital information (Basagne, 2010). The SEC financing is a major area of focus since there has been major concern regarding the SEC agency financing and whether they utilize the

The banking industry consists of almost sixty-five hundred banks that are insured by the Federal Deposit Insurance Corporation (FDIC). Out of these, there are eighty-one substantially large banks in the United States that are publically traded, which is where the market structure and industry information will be based. However, as with the rest of the country, these banks are very concentrated, with the largest banks accounting for over half of the market as well as accounting for the largest amounts of revenue.

This necessitated the need for development of regulatory measures for the industry. Bank regulation is a legal structure by which all financial

The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed to redesign numerous areas of the US regulatory system and to protect consumers against mortgage companies, banks, and other entities that were gambling and taking excessive risks with the consumers’ financial assets7. The act promised to restore America and create new jobs for those who had lost everything during the financial crisis of 2008. When the crisis occurred, Wall Street “did not have the tools to break apart or wind down a failing financial firm without putting the American taxpayer and the entire financial system at risk,” and Washington did not have the power to oversee and limit the risk-taking behavior that was taking place at the time7. The act is composed of sixteen titles, each one can be considered a powerful law individually; however, the act comprised them all together to have a major impact on the economy.

Foreign investment is an important part of our economy. There are many benefits to foreign investment in any country. It would be very difficult or impossible today to close the doors to foreign investment. The fact is foreign investment is responsible for providing a great deal of needed capital in this country. This capital is an asset in the continuous modernization and expansion of our manufacturing and other productive facilities. Without investment in our factories and processes we would fall behind in the world market. These investments lead to increased competitiveness within the international community.

The aim of this bill is to reduce the risk in various aspects of the US financial system. The law also created government agencies, such as the Financial Stability Oversight, Orderly Liquidation Authority, and Consumer Financial Protection Bureau (CFPB). These agencies are tasked to monitor the performance of companies considered as “too big to fail” to prevent serious

On the other side, the “carrot” part of the economy is where each person in the market is encouraged to take part of honest trade and is rewarded when he/she acts after the law. An incentive is a reward given to he or she when the person has achieved a goal, or in this case, has been acting correct according to the law. An example of a reward is that he or she can be given a bonus at work, maybe a certain amount when the agreed goals are achieved. Companies suffered from interest conflicts and disagreed on what to, to solve the situation. (3) Personally, I think incentives in the financial markets can be difficult to use as a tool to control the leading traders. The financial downfall in 2008 caused loss of jobs and house losses, and the U.S. economy went into an economic recession.(4) As a conclusion, I would say that a combination of both the command and control and the incentive system would be the best solution on how to regulate to financial industries due to the fact that it is a lot of money involved and people do take part of dishonest trades.

Another major part of the paradox of electoral economics can be seen through moral hazard. Moral hazard is insuring against the costs of bad behavior, which reinforces inefficiency (Magagna, 2/26). The regulators could have made one of two strategic choices: they could have said that all the big banks that made these bad choices fail, but instead they subsidized and absorbed the costs. Those big financial institutions that can be saved in the short term through government subsidies were saved. Most of the big banks didn’t need the money, but the government made all big institutions made all the big companies take the money all over the United States. This resulted in a big inflow of capital banks; however, it didn’t have any efficient use.

The Australian financial system evolved in five stages. The first stage was the introduction of financial institutions during the early colonial period in the 19th Century, where the influence of British institutions was a key driving force. The end of that period was marked by the 1890s depression which saw a major rationalisation of Australia’s financial institutions. The start of the modern era of financial regulation can be traced back to the introduction of banking legislation in 1945 and the establishment of Australia’s first central bank.

Goldman Sachs should have been punished for its behavior in the years leading up to the financial crisis. Goldman ended up settling with the federal government for $110 Billion, which I do not believe was sufficient based on the magnitude of problems created. This amount should have been much larger, and at minimum they should have forfeited the $14 Billion paid to them by AIG. (Inside Job, 2011) In addition, AIG should have had the right to sue Goldman Sachs for fraud. It was in the public’s best interest to keep Goldman up and running, however additional penalties could have been put on a repayment schedule to keep them solvent. Instead, you had Goldman giving out large bonuses.

There are various government structures in organizations although they are different from one branch of the government to the other. The structures help the government manage its economy efficiently. In the economy a too big to fail firm (TBTF) exists and it is defined as one that its complexity, size, critical functions, and interconnections are in the sense that in case the firm goes into liquidation unexpectedly, the rest of the economy and financial system will face severe consequences. The government provides support to TBTF companies not because they favor them but because they recognize implications for an advanced economy of allowing a disorderly failure outweighs the cost of avoiding the failure. Helping the TBTF firms enable the economy to realize high revenue. Various activities are to prevent their failure. They include providing credit, facilitating a merger, or injecting the capital of the government. The paper addresses the structures of the administration and the concept of too big to fail in financial and non-financial institutions plus the ethics involved with the theory.

The purpose of this paper is to show that the “regulatory capture” has played a role not easily measurable in causing the global financial crisis. To illustrate this, the first step will to describe the “regulatory capture” in its three possible qualifications; then, I will explain, providing some examples, how each of these categories played a possible role in posing the basis for the financial crisis. While illustrating the different forms of capture I will present some questions that leave space to different answers. Finally, I will conclude that the regulatory capture have surely played a role in generating the crisis, but it is not possible to evaluate the effective role it had in causing it.

Research suggests that government and large financial institutions should not be allowed to regulate cryptocurrency, because eventually it will change cryptocurrency to mirror our current paper currency system, and ultimately remove the freedom and anonymity associated with the use of cryptocurrency.

This work will examine the case 'Banking Industry Meltdown: The Ethical Financial Risk Derivatives" and determine which moral philosophy is most applicable to an understanding of the banking industry meltdown and explain the rationale. The case study will be analyzed and white-collar crimes considered as to whether they are different in any substantive manner from other more blue-collar crimes. This study will determine and discuss the role that corporate culture played in banking industry scenario and the response will be supported with specific examples. This work will postulate how leaders within the banking industry could have used their influence to avert the industry meltdown.

Financial systems and financial regulators are entities setup by the government of a country to ensure the availability and flow of financial resources in a fair and lawful manner without exploitation or monopolization of the resource by individuals or organizations. The task of ensuring the availability of finance and its transference is taken up by the financial systems of a country while the task of monitoring and regulating is taken up by the financial regulator.