Bank Regulation

The financial and housing market collapse of 2007 marked a new point in the way we understood the regulations in place in the banking industry; regulations that are primarily there to protect consumers, and the global economy, but failed. The banking industry is a highly dynamic field, with new investment vehicles being developed faster than legislation can keep with often times. The issue then becomes finding a balance between regulations that do not stifle growth, but are also not too flexible, allowing investors to exploit information asymmetry between them and consumers looking to invest money. In addition, the current status quo after BASEL III and the Dodd-Frank Act need to be discussed greatly, as they are not unequivocally flawless, specifically regarding the separation of commercial and investment banking, derivatives, and other forms of investment vehicles, how to address them, the rules and regulations regarding them, and an overall look at attempting to achieve the most efficient equilibrium of limiting bank power so banks do not keep the nation hostage and force us to bail them out such as AIG, however allowing them to reach their potential, because they do stimulate huge growth in the world stage.

Leave a Reply

Your email address will not be published. Required fields are marked *