...Dodd-Frank Act: Did it Work? Introduction “With the President’s signature, the [Dodd-Frank Act] will mark the greatest legislative change to financial supervision since the 1930s,” according to Margaret Tahyar, partner and member of the New York Financial Institutions Group (Tahyar). Officially signed by Barack Obama on July 21, 2010, the Dodd-Frank Act gave positive hope for the future for financial markets and institutions, being viewed as the “most comprehensive financial reform since the Glass-Steagall Act” (Amadeo). However, since the implementation of the bill, various differing opinions on whether the passing of the act has truly helped or hindered the overall financial economy have prevailed. Dodd-Frank Act Overview Officially signed as the Dodd-Frank Wall Street Reform and Consumer Protection Act, the bill was implemented to change and supervise all financial institutions. More commonly referred to as the Dodd-Frank Act, named after the two legislators who proposed it, Senator Chris Dodd and Congressman Barney Frank, the act was created in result of the Great Recession of 2008 and to rein in large Wall Street companies that contributed to the crisis in order to prevent future devastations (Peirce, Robinson and Stratmann). As of 2014, only a third of the nearly 400 required rules had been finalized and only one third had been proposed (Culp). Kimber Amadeo, a US Economy Expert, provides the eight major regulation changes that were brought about from the...
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...The Dodd-Frank Act is a legislation passed as a response to the financial crisis in 2008. It is intended to decrease various risks in the U.S. financial system. Some things it tried to create were the ability to grow jobs, protect consumers and prevent another financial crisis. It was made to restore faith in our financial system and to give Americans confidence that we will figure this crisis out and prevent another one the best we can. The act has established numerous new government agencies to oversee various components of the act. The Financial Stability Oversight Council is supposed to monitor the financial industry as a whole especially on Wall Street. They monitor how stable major firms are and their financial documents. They do this with major firms who if they fail, could have a major negative impact on our economy (companies deemed "too big to fail"). If any of these banks are considered to be too large and could possibly pose a systemic risk, the council has the right to break up the banks. The Financial Stability Oversight Council established the Volcker Rule which prohibits banks from owning or using hedge funds to increase profits. Next they made the The Consumer Financial Protection Bureau. The Consumer Financial Protection Bureau is in charge of credit and debit card companies and mortgage loans. This council is in place to make it easier for consumers to understand the regulations of mortgages. They make sure everyone is alert and clear of accurate...
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...11-8-2011 Financial Markets & Inst Dodd-Frank Assignment The Dodd Frank Act has been created as a regulatory reaction from the recent financial crisis. The magnitude of its implications and provisions has not been seen since the great depression and will be conducted as a major overhaul to the financial systems rules. Financial regulation within a system that clearly had ulterior motives and lacked market discipline is inevitable. Without clear transparency of what and how borrowers are investing individuals savings will surely lead to moral hazard and conflicting interests. With Dodd Frank hopefully some of this asymmetric information will be largely more apparent to an inspecting investor. This Act aims to promote the financial stability of the United States financial system by implementing rules and regulations to improve accountability and transparency. Dodd Frank mainly addresses issues dealing with ending the "too big to fail" banks, protecting the American taxpayer by ending bailouts, ensuring consumers safety from abusive financial services practices, and for other related purposes. The legislation gives the government more power to step in and "unwind" financial firms that are failing, enables more oversight of the derivatives market, and to protect the individual investor (Bentley). Thanks to Dodd-Frank, we will see whistleblowers offered incentives for reporting compliance violations to a larger and more powerful SEC. The SEC will also have the power to impose...
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...for the following uses: cell phones, DVD players, gaming devices, but also tungsten, tin, and gold. Activist groups working on the Democratic Republic of the Congo pursued a legislative strategy to pass a law that would require companies to be more transparent and accountable in their mineral sourcing practices. The Dodd-Frank was a law ratified by the U.S government in order to tighten regulation and requires manufacturing companies to track the minerals used in their products. Those companies claim their innocence and knowledge of the origins of those minerals products, but the government is still ensuring that is why the Dodd-Frank Act has been...
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...Isabella Jendryka IT Audit The Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank for short, is a law that is aimed to transform the world of financial services, through more stringent, and industry specific regulation. The act was passed on July 21, 2010, under President Barack Obama's administration and now performs as a corrective control for the damage that was done during the 2008 financial crisis. At over two thousand pages long, Dodd-Frank serves as a regulatory guideline for businesses, in order to ensure that history does not repeat itself. The act is named after two of its strongest advocates, U.S. Senator Christopher J. Dodd and U.S. Representative Barney Frank. The Dodd-Frank Act aims to repair the financial...
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...The full name of the bill is the Dodd-Frank Wall Street Reform and Consumer Protection Act, but it is better known and most often referred to as Dodd-Frank. The Act was signed into Federal law President Barack Obama on July 27, 2010 as a prompt response to the Great Recession of 2008. Initially proposed amid the wake of the Great Recession of 2008, the bill’s fundamental intention is to prevent another collapse of a major financial institution like Lehman Brothers. In a word, Dodd-Frank is a comprehensive and complicated piece of financial regulation that places pivotal regulations on the financial industry; such regulations would have tremendous effects on all federal financial regulatory agencies. The bill consists of about 16 major reform propositions and contains hundreds of pages, however, we will only focus on major rules of regulation....
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...Dodd-Frank Act: Did it Work? Introduction “With the President’s signature, the [Dodd-Frank Act] will mark the greatest legislative change to financial supervision since the 1930s,” according to Margaret Tahyar, partner and member of the New York Financial Institutions Group (Tahyar). Officially signed by Barack Obama on July 21, 2010, the Dodd-Frank Act gave positive hope for the future for financial markets and institutions, being viewed as the “most comprehensive financial reform since the Glass-Steagall Act” (Amadeo). However, since the implementation of the bill, various differing opinions on whether the passing of the act has truly helped or hindered the overall financial economy have prevailed. Dodd-Frank Act Overview Officially signed as the Dodd-Frank Wall Street Reform and Consumer Protection Act, the bill was implemented to change and supervise all financial institutions. More commonly referred to as the Dodd-Frank Act, named after the two legislators who proposed it, Senator Chris Dodd and Congressman Barney Frank, the act was created in result of the Great Recession of 2008 and to rein in large Wall Street companies that contributed to the crisis in order to prevent future devastations (Peirce, Robinson and Stratmann). As of 2014, only a third of the nearly 400 required rules had been finalized and only one third had been proposed (Culp). Kimber Amadeo, a US Economy Expert, provides the eight major regulation changes that were brought about from the Dodd-Frank...
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...repeating itself. The only question was what to do. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), signed into law by President Barack Obama on July 21, 2010, was the proposed answer. The act was the work of Representative Barney Frank (D-MA), Chairman of the Financial Services Committee and Senator Chris Dodd (D-CT), Chairman of the Senate Banking Committee. The purpose of the legislation is “to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end “too big to fail,” to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes” (The Dodd-Frank Wall Street Reform and Consumer Protection Act, 2012). While the law officially made it easier for whistleblowers to alert authorities to fraud, the law itself can be seen as unprogressive, rather than progressive, or forward thinking. According to the Association of Certified Fraud Examiners, fraud can cost an average company five percent of their annual revenues, which makes the detection of such fraud a priority for all stakeholders (Brink, Lowe & Victoravich, 2013). Prior to the Dodd-Frank Act, employees could only report instances of fraud internally, which triggered an organization to investigate the tip. This could potentially cause a conflict of interest. An advantage of the Dodd-Frank Act was the Whistleblower Rule, which aimed to improve...
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...explanation of what relationship the Dodd-Frank and Sarbanes-Oxley Acts have to financial markets and what are the similarities or differences between these Acts. The Dodd-Frank Act was proposed by Representative Barney Frank (D-Mass.) in the House of Representatives and former Senator Chris Dodd (D-Conn.), Chairman of the Senate Banking Committee, in response to the financial and economic crisis witnessed from 2007-2010. Sarbanes-Oxley established heightened standards for the boards and management of both public companies and public accounting firms. The law was passed after the myriad scandals that rocked American securities markets, e.g., Enron, WorldCom, Tyco, and others. Sarbanes-Oxley is wide in scope, establishing numerous responsibilities on the part of corporate boards, with compliance closely monitored by the government. While employees commonly discover fraud before other monitors, many are reluctant to report it. In an effort to encourage employees to report wrongdoing, Section 301 of the Sarbanes-Oxley Act of 2002 (SOX) requires audit committees of public companies to establish a reporting channel that allows employees to confidentially and anonymously submit claims involving questionable accounting or auditing matters. Despite these internal whistle blowing programs, there is still concern over employee willingness to report wrongdoing. Recently, the Securities and Exchange Commission (SEC) adopted the Dodd-Frank Wall Street Reform and Consumer...
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...Intermediate Accounting I Professor Stubbs Topical Paper 2: Dodd-Frank Act of 2010 In 2008, when the financial crisis occurred, millions of Americans were left without jobs and trillions of dollars of wealth was lost wealth. To make sure the Great Recession would not happen again, President Barrack Obama put into effect the Dodd- Frank Act. With the help of this law, banks will not be able to take irresponsible risks that had negative effects on the American people. Furthermore, with the Volcker Rule embedded into the act, it will ensure that banks are no longer allowed to own, invest, or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit, unrelated to serving their customers. The government will monitor banking activities through the use of the newly created Financial Stability Oversight Council that will work with the Office of Financial Research to use its resources and authority to investigate any it sees fit (CroweHorwath). Additionally, the act creates an instrument for government to shut down failing financially institutions without it creating a financial panic that leaves American taxpayers on the hook for the risky activities done by others. The act promotes market discipline that eliminates the expectation that the government will be there to bail them out in the situation where they fail. As it can be seen by the key provisions of the Dodd-Frank Act, its main purpose is to protect American families from having...
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...Repeal It is logical to believe that Sarbanes Oxley Act, Dodd Frank Act and JOBS Act exists for a reason. Although politic is a very complicated topic and has some sort of influence in establishing a new federal law, SOX, Dodd Frank Act and JOBS Act are reasonably justifiable. After WorldCom and Enron incidents, Sarbanes Oxley Act was established to regulate auditors and public company. After Late 2000’s mortgage crisis and others, Dodd-Frank and JOBS Act was established to regulate financial industry under federal government. Federal regulation seems like always came after a big crisis or downfalls to fix the issue and hopefully prevent future reoccurrence. However, federal government looked like a little bit too reactive because the regulations were always enacted after something bad happened. To make the matter worse, there is no way to proactively prevent any or all frauds or misconducts from happening due to their variety of types. In order to discuss should Sarbanes Oxley, Dodd Frank and JOBS Act be repealed, let’s look into each Act individually and in a more detail sense, In Sarbanes Oxley, some of the important aspects that SOX 2002 deals with are auditor independence and enhanced financial disclosures. It also established Public Company Accounting Oversight Broad (PCAOB) to monitor and oversee public firm’s financial activities. Because there was lack of Audit regulations, it later leaded to the big Enron fraud. Therefore it was clear that something has to be done...
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...Q. 1. What were the major factors that led to the recent financial crisis? How did we get here? Answer: One of the primary factors that can be attributed as to have led the recent financial crisis is the financial deregulation allowing financial institutions a lot of freedom in the way they operated. The manifestation of this was seen in the form of: a) Financial innovations that were not backed up with adequate risk controls and management. b) Too much reliance on Quantitative Risk Management ultimately leading to mispricing of risk across different financial and non-financial investments that were the product of the financial innovations made feasible by financial deregulation. c) The influx of liquidity both original and fabricated that led to significant price appreciation particularly in the real estate sector creating real estate bubble. d) The ever increasing prices of assets allowed ever increasing capacity to borrow. e) The sub-prime mortgage market where it was allowed to originate loans of poor credit quality by one player and sell it to others in a mortgage pool. Hence creating an incentive problem where the one who originates poor quality credit did not bear the credit risk for it. f) All these led financial institutions to the fallacy of being “too big to fail”. g) The fallacy that every risk can be quantified and managed led financial institutions into the trap and they started to lend and finance in ways that were unique...
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...The Dodd-Frank Wall Street Reform and Consumer Protection Act The Dodd-Frank, signed in 2010, was passed as a response to the US Great Recession of 2007/2008. The primary purpose is the create a sound economic foundation to grow jobs, protect consumers, rein in Wall Street and big bonuses, end bailouts and too big to fail, prevent another financial crisis. Key Provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act Consumer Protections with Authority and Independence: The Bureau of Consumer Financial Protection has been established to ensure full protection of US consumers with respect to clear and accurate information that they need for mortgages, credit cards and other financial products. This new independent body has...
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...Value investing is the strategy of purchasing an asset which is trading at a significant discount from its determined intrinsic value. It has long been regarded as a low risk method of providing outstanding investment returns (Klarman 2001). The investment strategy was described by Benjamin Graham and David Dodd in their book, Security Analysis (1940, p. 724). Over subsequent decades the investment approach has evolved utilizing varying fundamental methodologies but always maintaining the principle of investing when a discount to intrinsic value exists. Graham and Dodd (1940, p. 368) referred to this principle as the 'margin of safety'. This essay will explore the various methodologies, expand on the 'margin of safety' concept and discover the factors that have led to the success of the exponents of value investing. Bierig’s (2000) assessment of the Graham and Dodd approach indicated that a value investor doesn’t just follow share market fads but instead ‘searches for stocks selling for less than their intrinsic value’ and after purchasing, waits for market recognition that corrects this discrepancy. Athanassakos (2011b) has illustrated that a search for undervalued stocks is the initial process undertaken. He maintains that these stocks tend to be ‘avoided by large institutional investors’ and are not the ‘glamour stocks everyone wants to own’. Graham (1973, p. 211) describes two methods of searching for fundamentally undervalued stocks; companies selling at a low price to...
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...An Analysis of Value and Growth Investing Saint Leo University An Analysis of Value and Growth Investing This essay will define and identify the differences between value stocks and growth stocks. It will also explain the rationale that investors use for purchasing both value and growth stocks, and will identify whether value or growth investing has worked best over the long term. In addition this essay will provide incite as to which of the two investment methods I prefer and a justification for this preference and lastly will identify a recent example of someone who can be described as a value or growth investor and describe their successfulness with the method they chose. Value and Growth Stocks Defined According to our text, value stocks and market stocks are defined relative to their market-to-book ratios. A market-to-book ratio that well exceeds 1 indicates that the value of a firm’s assets exceeds their historical cost. As such, stocks with lower market-to-book ratios are classified as value stocks, while stocks with high market-to-book ratios are known as growth stocks (Berk, 2014, p. 28). When compared to stocks within a similar industry, value stocks may be lower priced and are considered more of a bargain, while growth stocks are more highly priced relative to those in their industry. Purchasing Value Stocks Versus Growth Stocks There are a variety of reasons that any investor might use to purchase a particular type of stock. Most of the reasoning...
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