Following the financial crisis of 2008, the United States government decided to take legislative action in order to protect the American public and tighten the leash on the financial sector. From unregulated derivatives markets to excessively risky trading and speculative losses written off under the cover of a portfolio hedge, the tools and investment vehicles utilized by the finance industry generated enormous amounts of revenue, however as the crisis showed, even financial powerhouses are susceptible to failure. Bailing out the finance industry with billions of dollars provided a quick fix for keeping major firms afloat with the taxpayer money, but it was clear that real change was necessary. Continue reading
The 2008 financial crisis left many people with no homes, jobs, or way of life. It affected the economy more significantly than any crisis since the Great Depression. Dodd-Frank was created in response to this catastrophe to assure that it would never happen again. The law imposes regulation in nearly every aspect of the financial industry, covering investment and commercial banks, insurance companies, rating agencies, hedge funds, and many others. With the implementation of Dodd-Frank, we must consider the costs and benefits of such a bill. If there is too much regulation on banks, for example, they will be less likely to lend, decreasing liquidity in our economy and leading to a lack of economic growth or even a recession. Continue reading
After watching the film, I definitely agree that the notion of firms being “too big to fail” still exists today, and in more industries than just investment banking. The 2008 financial crisis showed that investment banks are interconnected and rely on each other’s financial wellbeing. In the film, this interconnectedness could be seen after the Lehman Brothers’ bankruptcy filing. Investment banks saw immediate hits to their businesses as a result of the dwindling confidence in the industry. Other firms, such as GE, saw that their operations were affected by the lessening access to capital from investment banks. To the dismay of many, the notion of “too big to fail” means that the government may be required to aid the financial system at large when the market is unstable. Continue reading
The last BC, (Chelsea L, Kamal, Jordi, and Frank) invite you to Blgo prompt 5.
Watch “Too Big To Fail” and answer one of the following.
- Banks are too big to fail AND too big to manage, says Stockman (marketsanity.com)
- Too Big To Fail Is Now Bigger Than Ever Before (consciouslifenews.com)
- Celente: Fascism has come to America (marketsanity.com)
- Too Big To Fail Is Now Bigger Than Ever Before (infiniteunknown.net)
- AIG CEO Robert Benmosche: ‘Too Big To Fail Has Been Solved’ (huffingtonpost.com)