The Reform And Consumer Protection Act

The Federal Deposit Insurance Corporation (FDIC) is based in the United States and is run by the government. The banking Act of 1933, als known as the Glass-Steagall Act, led to its establishment due to the Great Depression that had been experienced in United States. This act came into play due to the Great Depression. During this time, people were withdrawing their money from the banks and keeping it at home. People were not feeling very confident about the banking system. So, President Franklin Roosevelt had to step in and do something. The day after President Roosevelt’s inauguration, he declared a four-day banking holiday that shut down the banking system, which included the Federal Reserve. Several days later, the Emergency Banking

The Federal Deposit Insurance Corporation (FDIC) safeguards and promotes confidence in the United States financial system by insuring deposits in banks, identifying, examining, and addressing risks, and by limiting the effect on the economy and the financial system when a bank fails. An independent agency of the federal government, the FDIC was formed in response to bank failures that happened in the 1920s and 1930s. The FDIC employs more than 7,000 people and is headquartered in Washington, D.C., but conducts most of its business in six regional offices, and in offices around the country. The FDIC is managed by a Board of Directors; five individuals appointed by the President and confirmed by the Senate, with no more than three being from

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is commonly referred as the Dodd-Frank Act. This act was passed as a response to the Great Recession in order to prevent potential financial debacle in the future. This regulation has a significant impact on American financial services industry by placing major changes on the financial regulation and agencies since the Great Depression. This paper examines the history and impact of Dodd-Frank Act on American financial services industry.

The regulation that I have chosen for this paper is amendment in the Regulation X i.e. “Real Estate Settlement Procedures Act” and Regulation Z which is for “Truth in Lending”, for establishing the new disclosure requirements and forms in Regulation Z for the most closed-end consumer credit transactions secured by the real property. This regulation is controlled by the Bureau of Consumer Financial Protection. The role of the Consumer Financial Protection Bureau (CFPB) is to provide consumers information related to the terms of their agreements with financial companies during their application for a mortgage, choosing among credit cards, or using any number of other consumer financial products. The mortgage market is the single largest market for the consumer of financial products and the services in the United States, with approximately $10.4 trillion in loans outstanding. Since last decade, market went through an unprecedented cycle of the expansion and the contraction that was fuelled in the part by securitization of mortgages and the creation of increasingly sophisticated derivative products. This led to the collapse of financial system in 2008 and sparked the most severe recession in United States.

On October 3, 2008 President George W. Bush signed the Emergency Economic Stabilization Act of 2008, otherwise known as the “bailout.” The Purpose of this act was defined as to, “Provide authority for the Federal Government to purchase and insure certain types of trouble assets for the purpose of providing stability to and preventing disruption in the economy and financial system and protecting taxpayers, to amend the Internal Revenue Code of 1986 to provide incentives for energy production and conservation, to extend certain expiring provisions, to provide individual income tax relief, and for other purposes” (Emergency Economic Stabilization Act). In my paper I will explain and show the relationship between the Emergency Economic Stabilization Act of 2008 and subprime lending, the collapse of the housing market, bundled mortgage securities, liquidity, and the Government 's efforts to bailout the nation 's banks.

In 2007-2008 the US went into a recession, a financial crisis that has since then taken five years to rebuild. During that time millions of Americans were unemployed and faced many economic struggles which negatively impacted the real estate market causing a multitude of foreclosures. The reason for this recession was because there was no authority over banks and they were not being monitored properly. Banks were able to gamble with the finances of millions of people with no consequences towards their actions. The Dodd Frank Act Wall Street Reform and Consumer Protection Act of 2010 was put into place to make sure that nothing like this ever happened again; The Dodd Frank Act implemented and set laws into place to make sure that banks and financial

The Federal Reserve System is the most powerful institution in the United States economy. Functioning as the central bank of the United States, acting as a regulator, the lender of last resort, and setting the nation’s monetary policy via the Federal Open Market Committee, there is no segment of the American economy unaffected by the Federal Reserve [endnoteRef:1]. This power becomes even more substantial in times of “unusual and exigent circumstances,” as Section 13(3) of the Federal Reserve Act gives authority to the Board of Governors to act unilaterally in lending and market making operations during financial crisis[endnoteRef:2]. As illustrated by their decision making in the aftermath of the 2007-2008 Great Recession,

“Lehman Collapse Sends Shockwave around the World” Reads the British newspaper, The Times, as the world sinks further into the recession in September 2008. The housing collapse was orchestrated and perpetrated by a system created by investment banks to allow them to make money, by keep the American people in debt, even when the banks knew the loans would default. The investing banking system was left unchecked by the United States government because it did not have the regulations as did the depository banks. There was immoral investing in people’s retirement, pensions, and homes where it created at housing collapse, in which thousands of people over paid in their subprime loans and lost their homes in the process. The federal Reserve is a very selfish and heartless entity in America that has had powerful influence in American politics for decades. The Federal Reserve must be dissolved and succeeded by a federalized entity that has no obligation to any investors. It must contain checks and balances to create a fair playing field. It must not benefit one group of people, but the nation as a whole. Finally, the new banking structure must be solid to keep necessities at steady prices, and must not work on speculation. Prior to “the Fed”, two previous central banking systems were in place, but were limited on how long they influenced (both twenty years) their interest in government, and twice, both banking system were not allowed renewal because many political figures,

These panics contributed to the failure of banks and businesses alike. In 1907 banks extended too much credit to consumers in order to keep up with the increase in spending activity. The currency available to the public was depleted soon after. Banks could no longer conduct loans or pay out money from existing accounts. This led to the loss of their security and their complete collapse. Financial crisis of this type had happened before but this time it led to the creation of the Federal Reserve Act. President Woodrow Wilson signed the act in December of 1913, and established the Federal Reserve board, but their purpose and oversight were not clearly defined. Originally the Federal Reserve banks role was to control the discounted rate at which other banks could lend each other money. Over the years the Federal Reserve’s powers have grown (Federal Reserve System

Before the advent of the Federal Deposit Insurance Corporation (FDIC) in 1933 and the general conception of government safety nets, the United States banking industry was quite different than it is today. Depositors assumed substantial default risk and even the slightest changes in consumer confidence could result in complete turmoil within the banking world. In addition, bank managers had almost complete discretion over operations. However, today the financial system is among the most heavily government- regulated sectors of the U.S. economy. This drastic change in public policy resulted directly from the industry’s numerous pre-regulatory failures and major disruptions that produced severe economic and social

In order to have a stable banking system, congress had called a meeting where “the National Monetary Commission” (Bagwell), was formed a year after the panic had passed. The meeting include bankers like J.P Morgan, the National city bank, and many others. They all have gather to discuss the crisis that happened and to add new regulations on how to protect the money from people investing. This action was led for the creation on The Federal Reserve act of 1913. Historians had agree that the creation of the federal reserved was due to The National Monetary Commission, where banking laws where review. According to historians the text shows “Congress formed the National Monetary Commission to review banking policies in the United States” including “the monetary reform movement that led to the establishment of the Federal Reserve

“As a result of this movement, the banking laws changed. Congress began to investigate in more depth of the money used to support banks. Eventually Congress changed the level of liquidity of the banks once realizing they were too low.” This movement helped congress recognized a huge flaw in banking services. Also, an act was passed by Barack Obama on July 21, 2010. This act was known as the Dodd-Frank Act. “In the fall of 2008, a financial crisis of a scale and severity not seen in generations left millions of Americans unemployed and resulted in trillions in lost wealth. Our broken financial regulatory system was a principal cause of that crisis. It allowed some irresponsible lenders to use hidden fees and fine print to take advantage of consumers.To make sure that a crisis like this never happens again, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. The most far reaching Wall Street reform in history, Dodd-Frank will prevent the excessive risk-taking that led to the financial crisis. The law also provides common-sense protections for American families, creating new consumer watchdog to prevent mortgage companies and pay-day lenders from exploiting

The Federal Reserve is the main banking system in the United States. It has 12 regional banks around the nation, its headquarters being located in Washington DC. The Federal Reserve (better known as the Fed) was established in 1913 by Congress in order to “provide the nation with a safer, more flexible, and more stable monetary and financial system” (federalreserve.gov). Although the Fed was created over a century ago, it is still a major influence in the banking systems today.

Government departments are instrumental to a flourishing and secure economy. They are in place to serve their constituents and ought to keep that in mind. The Federal Deposit Insurance Corporation (FDIC) fits this well and is in place to ensure that bank users are protected in instances of economic downturn and that their money is insured. In this way, regulation is extremely necessary to ensure a stable economy in instances of financial instability. To completely understand the FDIC, it is important to understand why and how it was created, its history, major responsibilities and who the leaders are.

In 1913, Congress passed the Federal Reserve Act to establish the "Federal Reserve Bank" which created a central bank that would handle all the nation's money. The Federal Reserve Bank has several board members which are appointed by the President and by the Senate. The board members are the only governmental control over the bank. (crunchy roll) It was also given the authority to issue out paper money (dollars) as legal currency. Which the fed couldn’t even handle and the great depression is a great example of the repercussions. The flaws in the Federal Reserve’s structure became apparent during the initial years of the Great Depression. Congress responded by reforming the Federal Reserve and the entire financial system. Under the Hoover administration, congressional reforms culminated in the Reconstruction Finance Corporation Act and the Banking Act of 1932. Under the Roosevelt administration, reforms culminated in the Emergency Banking Act of 1933, the Banking Act of 1933 (commonly called "Glass-Steagall"), the Gold Reserve Act of 1934, and the Banking Act of 1935.Where the name was changed to the federal reserve system. This act also reorganized the Federal reserve with respect to the number of directors and length of their term, and also shifted some of the Federal Reserve’s responsibilities to the Treasury Department and to new federal