Question

What are the key areas of regulatory changes that have been undertaken following the Global financial crisis? ?In American Context

Answer 1

Some of the key regulations that were undertaken are:

1. Frank Dodd act was passed in the year 2010 for consumer protection and to reduce the risks in the US financial system. The bill proposed the formation of the federal insurance office which will monitor the financial organizations which are considered too big to fail.

2. Expanding the FIDC (Federal insurance and Depository Corporation) so that it can include both financial banks and non-banking financial institutions so the overall risk is reduced.

3. Prevent rescuing of a failing firm. It was regulated that it is better for a firm to "Fail" in an orderly manner rather than having to provide financial aid to failing organization and creating a bigger problem.

4. The Fed increased its reserve ratios and banks had to have stronger liquidity and stronger capital requirements.

5. The housing and economic recovery act was passed in 2008 to make sure that confidence is restored in the housing and mortgage markets.