Tag: financial crisis

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

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

02/8/11

Stock market crash:1929

The stock market crash on October 24, 1929  is remembered as one of the most devastating event in Wall Street history. In the weeks leading up to the crash, the market was very unstable.A record of 12.9 million shares were traded on that day .The Dow Jones Industrial Average partially recovered in November- December 1929 and early 1930; however reversed and crashed again.The crash began a 12 year depression that would plague the nation. People came to remember this day as Black Thursday in America and Black Friday in Europe. Combined the stock market crash and the Great Depression caused the biggest financial crisis of the 20th century.