Category Archives: May 16 Assignment

05/15/11

Obama’s New Deal

The article that I chose is “Obama : Fix Market Regulation” from USA today. Obama came into office at a time of turmoil in our economy. This article is about how Obama and his administration are trying to set new rules and regulations to revive the economy. According to USA today McCain stated “There is a tendency for liberals to seek big government programs that sock it to American taxpayers while failing to solve the very real problems we face.” As you can see that the previous administration believed in very little regulation. Obama stated “Our free market was never meant to be a free license to take whatever you can get, however you can get it. That is why we have put in place rules of the road to make competition fair and open and honest, We have done this not to stifle, but rather to advance, prosperity and liberty.”

 

One of the new regulations that Obama have put in place since he came into office is for credit cards and those who are burdened by debt. An article from MSNBC stated “The new credit card rules… prohibit companies from giving cards to people under 21 unless they can prove they have the means to pay the debt or a parent or guardian co-signs. A customer also will have to be more than 60 days behind on a payment before seeing a rate increase on an existing balance. Even then, the lender will be required to restore the previous, lower rate if the cardholder pays the minimum balance on time for six months.”

 

http://www.usatoday.com/news/politics/election2008/2008-03-27-economy-speech_N.htm

http://www.msnbc.msn.com/id/30884011/ns/business-personal_finance/t/obama-signs-new-rules-credit-cards-law/

05/13/11

Eligibility Standard for “Companies that are Too Big to Fail”

http://video.nytimes.com/video/2011/05/12/business/100000000816342/bernanke-takes-on-too-big-to-fail.html

 

Barack Obama has signed the Dodd-Frank Wall Street Reform and Consumers Act in July 2010. This law allows the government to oversight and regulate financial companies that are critical to the economy; however, the government finds it difficult to determine the eligibility standards for the companies. At this point, the regulators have decided that any banks with over $50 billion worth of assets will automatically fall under the standard for additional regulations, but as for financial firms, such as hedge fund and insurance companies, the regulators will need more information and guidelines to determine the standard. The government claims to formulate the standards by this summer, while the deadline for the grand decision is January 2012.

 

The Dodd-Frank Wall Street Reform and Consumer Act, which increases government regulation and eliminate certain economical freedom, is opposite to the Gramm-Leach-Bliley Act of 1999, which gave financial more freedom by allowing them to consolidate. The Gramm-Leach-Blieley has repealed the prohibition of combining insurance, securities, and banking by the Glass-steagall Act of 1933. By eliminating such restriction, the US economy has move a tiny step closer toward a free economy. However, the US economy has taken a larger step toward government regulated economy after the passage of the Dodd-Frank Wall Street Reform and Consumer Act.

 

 

 

Article Link: http://www.nytimes.com/2011/05/13/business/13regulate.html?_r=1&scp=1&sq=government%20regulation&st=cse

05/13/11

Obama Signs Overhaul of Financial System

The New York Times article I chose is about passage of the legislation, The Dodd–Frank Wall Street Reform and Consumer Protection Act, a response to the 2008 financial crisis that tipped the nation into the worst recession since the Great Depression. The law subjects more financial companies to federal oversight and regulates many derivatives contracts while creating a consumer protection regulator and a panel to detect risks to the financial system.

The savings and loan crisis of the 1980s and 1990s (commonly referred to as the S&L crisis) was the failure of 747 out of the 3,234 savings and loan associations in the United States. The concomitant slowdown in the finance industry and the real estate market may have been a contributing cause of the 1990–1991 economic recession.As a result of the savings and loan crisis, Congress passed the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) which dramatically changed the savings and loan industry and its federal regulation.Some commentators believe that a taxpayer-funded government bailout related to mortgages during the savings and loan crisis may have created a moral hazard and acted as encouragement to lenders to make similar higher risk loans during the 2007 subprime mortgage financial crisis.

Sources: http://www.nytimes.com/2010/07/22/business/22regulate.html

05/11/11

Assignment due 5/16

1) Write a post that highlights a news story about government regulation since 2008 (which has not yet been covered on the blog).  Include a link to the original source(s) you are using to learn about the story, and write at least one paragraph summarizing the most important aspects of the story. Write at least one additional paragraph comparing the actions described in your story to those taken (either towards regulation or deregulation) by the U.S. government between 1980 and 2000. I encourage an image to highlight and add a new perspective on your topic.