Items tagged with financial crisis:
News & Updates:
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In May 2018, by 258 in favor and 159 against, the US Congress adopted the Economic Growth, Regulatory Relief, and Consumer Protection Act. This bill represents the most significant change in the Dodd-Frank Act which was adopted after the 2008 financial crisis to protect the economy against future crises. Summarizing first the different waves of financial regulation and deregulation in the US history, this article will analyze this latest bill and its implications. -
In the wake of the financial crisis, G20 Leaders gathered in Pittsburgh in 2009 with two chief goals: stabilize the global economy and begin the work of preventing future crises.[1] Because attendees knew that improving derivatives regulation was essential to accomplishing those goals, they provided a blueprint for reform at the summit’s close focused on four key aspects of derivatives markets: trading, clearing, reporting, and capital requirements.[2] That blueprint influenced a range of post-crisis laws that made global markets more stable and transparent. But there is still work to do. Regulators now must focus on fine-tuning reforms, particularly by (i) remaining watchful for new, emerging risks, and (ii) preserving systems of cooperation and recognition so that global regulators can work together to safeguard interconnected financial markets. -
Is the global financial system more secure since the crash of 2008? Professor Richard J. Herring indicates that because of new regulations, banks are less prone to experience another collapse. He argues “Most of the reforms have aimed at reducing the vulnerability of banks…. Equally important, however, are the reforms aimed at enabling the authorities to deal with a bank insolvency without imperiling the financial system.” Herring also compares the effects of the global financial crash in other markets, such as the European Union. He contends “…the fundamental problem [the Europeans] faced is that they lacked the important back-up of a facility comparable to TARP. They lacked financial resources to recapitalize banks that were inadequately capitalized…” -
In challenging the notion of Lehman Brothers causing the 2008 financial crisis, Professor David Arthur Skeel contends that they were not the main culprits. Professor Skeel puts forth a step-by-step analysis of why Lehman’s demise was not the sole event that caused this major financial event in American history. He argues “Almost exactly six months before Lehman, another major investment bank, Bear Stearns, collapsed in similar fashion. Regulators’ handling of Bear Stearns’ distress set the stage for everything that followed.” In this quote, Skeel indicates that we must look pre-Lehman for the troubling signs of the impending financial collapse. -
Through an economic analysis of the Turkish lira crisis, Professor of Finance Joao Gomes, argues that fears of widespread contagion are unfounded. Gomes claims that even countries that have made the biggest investments in Turkish banks such as Italy and Spain are not at risk of a similar collapse. The professor does, however, points out the role of populism and short-sighted economic practices that have led to the devaluation of the lira. Ultimately, Gomes claims that Turkey is at the mercy of international creditors and only time will tell how their currency crisis will be resolved.
