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Perhaps Not!
By Marian Wang
ProPublica, Sept. 12, 2011, 1:20 pm
With the presidential campaign in motion, and President Obama urging immediate passage of his new jobs bill, the attention in Washington has shifted almost exclusively to the economy and job creation. And, that means a shift away from regulation, right? Not necessarily.
Growth Spurts?
Some regulators and financial industry experts are predicting the opposite—that new financial regulations will spur some growth.
For example, The New York Times’ DealBook blog cited derivatives regulation [1] as one example. Dodd-Frank requires a substantial chunk of the $600-trillion derivatives market to trade on exchanges or on new electronic trading platforms.
“I have no doubt that these new regulations, instituting new types of clearing, trading and reporting platforms, will foster a landslide of hiring in the financial sector,”
Bart Chilton of the Commodity Futures Trading Commission said in a recent speech cited by the Times. As another New York Times piece noted, previous financial regulation laws have resulted in additional jobs for accountants and lawyers [2], at least.
But, separate from the jobs created to actually handle new regulation, others have pointed out that regulations can have a long-term, positive effect on overall economic growth by preventing the types of crises that put an industry on life-support.
The Studies
Last year, two studies by central bankers and regulators found that the short-term impacts of stricter capital requirements were “significantly smaller” than the estimates published by banking groups, the Times reported.
Rather, the studies said that stricter regulation would lead to more long-term growth [3] by preventing future crises.
Banks see higher capital requirements
- Which require them to have more financial cushion to balance out risk-taking as a damper on profits.
- And, they have repeatedly warned that tougher rules will hamper lending, reduce investment and slow economic growth.
Assessment
But, not everyone sees it that way. Swiss regulators, for instance, indicated last year that they would impose even tougher capital standards on their country’s banks on the premise that investors would rather put their trust [4]—and their dollars—in safer banks.
Conclusion
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Filed under: Alternative Investments, Experts Invited, Health Law & Policy, Investing | Tagged: banking capital requirements, Bart Chilton, Commodity Futures Trading Commission, derivatives regulation, Dodd-Frank, Financial Regulation, Marian Wang, ProPublica |
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Regulators Loosen Limits on Risk in Latest Drafts of Key Financial Reform Rules
The regulatory agencies in charge of finalizing some of the most controversial rules mandated by the financial reform law are leaning toward making them looser and more favorable to banks and other traders.
http://www.propublica.org/blog/item/regulators-loosen-limits-on-risk-in-latest-drafts-of-dodd-frank-rules
Manfred
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‘Volcker Rule’ Proposal Approved by FDIC; Wall St. Fumes
The FDIC Board on Tuesday unanimously approved a notice of proposed rulemaking mandated under section 619 of Dodd-Frank that implemented the “Volcker rule” requirements.
Wall Street firms decry proposed rules to take effect in July 2012; and the FDIC will accept comments until January 13th 2012.
http://www.advisorone.com/2011/10/11/volcker-rule-proposal-approved-by-fdic-wall-st-fum
Manfred
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SEC Advances Volcker Rule
Manfred – One day after being approved by the FDIC, the SEC approved the proposed rule implementing the Volcker rule, mandated under Section 619 of Dodd-Frank.
http://www.advisorone.com/2011/10/12/sec-advances-volcker-rule
Bethany
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Volcker Rule, Dodd-Frank, et al
So, some governmental drones with no more ambition than to be a regulator are going to outsmart some of the greatest financial and economic minds in the world, eh!
Just mandate the banks to be capitalized at a rate of 25%; then throw all the rules and regulators away as un-needed.
Dr. Hightower
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On Dodd-Frank
Capital markets industry participants are preparing to fulfill the new collateral requirements under the Dodd-Frank Act, with many leading organizations already implementing initiatives to address new clearing and margin requirements.
While uncertainty surrounding the regulations remain, it is likely that the roles of Central Counterparties and Futures Commission Merchants will transform in the post Dodd-Frank era.
Ben
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Dodd-Frank Post Election
Expect more financial regulatory changes.
http://www.financial-planning.com/news/More-Dodd-Frank-Rules-Coming-Schwab-Strategist-2681765-1.html?ET=financialplanning:e12163:86235a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=fp_alert_110812
And, be wary of a new recession if Congress and the new administration don’t take steps to keep the country from going all the way over the so-called fiscal cliff.
Ann Miller RN MHA
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No, Obama Isn’t About to Crack Down on Wall Street
Obama sweeps into his second term with real advantages, including stronger appointees and more senators on his side.
http://www.propublica.org/thetrade/item/no-obama-isnt-about-to-crack-down-on-wall-street
But, the financial regulation problems run so deep that he is unlikely to solve them.
Kirk
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‘Act of Congress’ Stresses Hopeful Creation of Dodd-Frank
[Omits Grim Ending]
A new book from long-time Washington Post editor Robert Kaiser follows the creation of Dodd-Frank, but doesn’t follow up to see how things turned out.
http://www.propublica.org/article/act-of-congress-stresses-hopeful-creation-of-dodd-frank-omits-grim-ending
Ike
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