Posts
Check out THIS CBS News article and THIS Bloomberg article for a little information about his speech, and the potential impacts we will begin noticing as a result of this regulatory legislation. I think this legislation will help mitigate many of the potential Wall Street concerns many of us had during Tuesday's debate.Washington is trying to take the necessary steps to prevent future financial instability, do you think Dodd-Frank is a step in the right direction?
The Link below is to Bernanke's entire speech, but I have added the conclusion if you just want to read that instead, as the speech is rather long.
http://www.federalreserve.gov/newsevents/speech/bernanke20110505a.htm
"The financial crisis demonstrated clearly that supervisory and regulatory practices must consider overall financial stability as well as the safety and soundness of individual firms. The Dodd-Frank Act requires regulators to mitigate the buildup of financial excesses and reduce vulnerabilities, and it created an interagency council to monitor financial markets, to identify emerging threats, and to help formulate policies to contain those risks. For our part, the Federal Reserve has restructured its internal operations to facilitate a macroprudential approach to supervision and regulation and to monitor systemic risks. We are committed to working closely with the oversight council and other agencies to promote financial stability. While a great deal has been accomplished since the act was passed less than a year ago, much work remains to better understand sources of systemic risk, to develop improved monitoring tools, and to evaluate and implement policy instruments to reduce macroprudential risks. These are difficult challenges, but if we are to avoid a repeat of the crisis and its economic consequences, these challenges must be met."
This was quite interesting and incredibly relevant to our debate on Tuesday. As Dr. McKinney mentioned the "against banking" side took an ethical stance whereas the "for banking" side took a free market approach. This was exactly the arguments being made by the Fed and countered by bank representatives who spoke.
ReplyDeleteWe had an opportunity to speak more one on one with a bank auditor from the Fed who used to work on Wall Street. He basically said that the reason he left to work for the Fed was due to the level of corruption which where against his ethical standards. He then stated that it was difficult for him to try and get things corrected because "there are no profits in whistle blowing".
Because the U.S values capitalism and competition, corruption takes place as companies try to get an advantage over their competitors. The Fed's role is to try and regulate and manage these companies to ensure this does not happen. As Bernanke put it, they do not want to regulate the industry but it is clearly necessary. Dodd-Frank is intended to begin that process.
Also, the auditor was quite interested in coming to Kalamazoo to speak. Unfortunately, I don’t think we have enough time to schedule.
Jared, I heard you were able to meet with a bunch of CEO's and VIP's during the evening. You must have gained a lot of valuable insight. Would you fill us in on that experience?
ReplyDeleteSure Dane, I don't think the entire story is blog worthy nor appropriate, but I used my networking skills to make some new contacts, and earn copious amounts of free grey goose and champagne in the process; I guess you could say it was a pretty memorable night on the town.
ReplyDeleteI was not extremely familiar with this reform or its specific changes, so thanks for sharing Jared. This relates perfectly with our debate. It is refreshing to see that measures are being taken to prevent what happened prior to the financial crisis we are dealing with now. I am interested to hear more about this in class.
ReplyDeleteI think this was a great post because I was also not completely sure of how Dodd-Frank was/is going to work. It is a shame that Republicans in the U.S. House of Representatives moved to weaken and delay key parts of Dodd-Frank. The banking panel chairman Tim Johnson made clear that such efforts will face a steep uphill climb in the Democratic-controlled Senate.
ReplyDelete"We cannot allow Dodd-Frank to be dismantled," Johnson said at a hearing focused on the work of an independent commission that investigated the financial crisis of 2007-2009, which prompted the drafting and passage of Dodd-Frank.
"We simply cannot afford to go back to the old financial system that destroyed millions of jobs and cost the economy trillions of dollars," Johnson said.