Question

How and why did the financial regulations change after the Global Financial Crisis?

Answer 1

The financial regulations could have prevented or mitigated the credit crisis of 2008. If the government regulations were in place to the accumulation of subprime mortgages would have been less. The credit score setting, down payment and proof of income requirements that lenders need to adhere to could have prevented the credit crisis of 2008. Regulations would have mitigated or prevented the credit crisis because it would have prevented or limited leveraged financial institutions from taking on high risks.

A solid system of financial regulations is required and necessary to ensure that no one bank or financial institution has such a concentrated amount of risk that can be proven to be detrimental to the banking and financial system. Bank rules and regulations is a form of government regulation which subjects banks to certain restrictions, requirements, and guidelines that are designed to create market transparency between banking institutions and the corporations and individuals with whom they conduct business, among other things. This is also vital for customers in order to in still confidence in the system of banking and preventing any such activities that can be to threaten the supply of money. As people rely on banks for loans, checking and savings accounts and other products and services, bank regulations help ensure that such services are provided. Thus today the world’s banks are mostly stronger now in comparison these were on the eve of the last financial crisis.