Volcker Rule Essay

1326 words - 5 pages

The Federal Reserve Act was enacted in 1913, which created the central banking system of the United States, the Federal Reserve. The federal reserve acts as the bank to bankers and the bank to the federal government. The goals of the Federal Reserve are to create a safer, flexible, stable financial system. The primary responsibility of the Federal Reserve is to formulate and implement the monetary policy of the nation. Another one responsibility of the Federal Reserve is to supervise and regulate banking institutions and maintain consumer confidence in practices. Additionally the Federal Reserve provides financial services to depository institutions, the U.S. government, and foreign central banks. They clear checks, process electronic payments, and distribute money to United States financial institutions.
The system is still in tact today. The central bank, for the most part, is independent of political process. The Federal Reserve must regularly report to Congress to address important issues that the House and Senate may have. Throughout the years, since the establishment of the Federal Reserve, there has been periods of tension with Congress. In 1929 the stock market crashed. Although the United States economy entered into a depression six months before the fall of the stock market prices on the “New York stock exchange in October of 1929” many still claim the catalyst of the great depression was the crash itself. The efficient market hypothesis suggests the opposite, that the great depression was the cause of the stock market crash. Prior to the great depression, the Government relied on “impersonal market forces to achieve the necessary economic correction”. Theorists of the efficient market hypothesis believe that the economy will provide balance and stability to the financial system on its own, unless the Government interferes. In the early years of the great depression, this solution did not provide the recovery the Government desired, inspiring change in the structure of the United States Economy.
Regulation of Banks and Securities Firms
To promote recovery, Franklin D. Roosevelt’s political campaign for president promised a new deal for the American people. In 1933, the campaign proved successful and President Franklin D. Roosevelt “increased Government regulation and massive public work projects”. As a part of the New Deal, the Securities Act of 1933 and the Glass-Steagall Act (GSA) were enacted. These acts resulted in two separate regulatory schemes, one for institutions offering securities to the public and, a second, for commercial banks, prohibited from offering securities to the public.The GSA prohibited banks and securities firms from affiliating with one another. The term “bank” refers to any financial institution that holds federally insured consumer deposits. A securities firm, does not hold federally insured consumer deposits. Securities firms are also referred to as investment banks, or...

Find Another Essay On Volcker Rule

The Federal Reserve and Money Supply If "taxation without representation" could rally the colonists against the British Crown in 1776, tight money and ruinous interest rates

3767 words - 15 pages that at least equal in size and scope the impact of major tax legislation that Congress and the White House must belabor in public debate for months.Popularized studies of Federal Reserve performance in recent decades convey the image of the Fed seated in its Greek temple on Constitution Avenue, with Chairmen Volcker and Greenspan elevated to the realm of the gods. From centers of economic power around the nation - Wall Street, Capitol Hill, the

Milton Friedman's Ideas Essay

1756 words - 8 pages amount of money in an economy, in the form of coin, currency, and bank deposits) is the chief determinant on the demand side of short-run economic activity.” Milton Friedman is generally regarded as monetarism’s leading exponent. He believed that the government should seek to promote economic stability, but only by controlling the rate of growth of the money supply. It could achieve this by following a simple rule that stipulates that the money

Impact of insider trading on business ethics in the Union Bank of Switzerland

3048 words - 12 pages for at least two weeks should be mandatory for all organizations to deter those committing fraud from being there 24/7.ReferencesBenston, G. (1990). The separation of commercial and investment banking. London, England: Oxford University Press.Connolly, T. (2011, October 28). Winning strategies reports muriel siebert supports volcker rule. Retrieved from http://www.prnewswire.com/news-releases/winning-strategies-reports-muriel-siebert-supports

Events In The World Of Finance Under A Descriptive And Critical Work Around Three Events In The World Of Finance – Glass-steagall Act (1933), Sarbanes-oxley Act (2002) And Dodd-frank Act (2010)

1988 words - 8 pages the "Too Big to Fail" idea and taxpayer-funded bailouts. In the tenth title is created an entity, the Consumer Financial Protection Bureau, which is expected among others to ensure the preservation of state law or also to make regulatory improvements to assure consumer protections of abusive financial services practices. The eighth title refers again to the Wall Street transparency and accountability. The sixth title implemented the Volcker Rule

When the Bubble Burst

1539 words - 6 pages By the time I arrived state side from my second tour in the Middle East the housing bubble had already burst. I noticed a drastic change in the way that many of my friends and family were living. Several of my friends that worked in real estate had sold their boats and seconds houses. My own stock portfolio had lost a third of its value. My sister and her husband had defaulted on their home mortgage leaving them scrambling for a place to live. I

phase diagram

4456 words - 18 pages that can be used to graphically represent the thermal behavior of mixtures by studying the compositions and temperatures at which particular phases exist, equilibrium curves, and the eutectic point. The diagram has composition on the x axis and temperature on the y-axis at a specific pressure. The equilibrium curves are the phase boundaries of the system. All the systems system studied were at constant pressure, so according to Gibb's Phase rule

Revolutionary Work of Art

1890 words - 8 pages Walter Benjamin emphasizes in his essay, “The Work of Art in the Age of its Technological Reproducibility” that technology used to make an artwork has changed the way it was received, and its “aura”. Aura represents the originality and authenticity of a work of art that has not been reproduced. The Sistine Chapel in the Vatican is an example of a work that has been and truly a beacon of art. It has brought a benefit and enlightenment to the art

Enlightenment Thought in New Zealand Schools

1594 words - 6 pages democracy to function properly as in a democracy rule and so as Mill (1992) states there becomes “the possibility of a ‘tyranny of the majority’” (p.367). Meaning that the majority ruling may become oppressive over the minority. This is where the principle of liberalism comes in, it places limits on the government and provides stability by when individuals become too free. (Mill, 1992). The intellectual ideals of the nineteenth century continued

Psychological Egoism Theory

2240 words - 9 pages The theory of psychological egoism is indeed plausible. The meaning of plausible in the context of this paper refers to the validity or the conceivability of the theory in question, to explain the nature and motivation of human behavior (Hinman, 2007). Human actions are motivated by the satisfaction obtained after completing a task that they are involved in. For example, Mother Teresa was satisfied by her benevolent actions and

How Celtic Folkore has Influenced My Family

1587 words - 6 pages Every family has a unique background that influences the way they live and interact with other people. My parents, who emigrated from Ireland to the States with my three brothers in 1989, brought over their own Celtic folklore and traditions that have helped shaped the way our family operates and lives. One aspect of folklore that has helped shape my family dynamic is the Celtic cross—both its background and what role it has played in our lives

Julia Margaret Cameron

1406 words - 6 pages At a time when women were looked upon as being homemakers, wives, mothers and such the late 1850's presented a change in pace for one woman in specific. Photography was discovered in 1826 and soon after the phenomenon of photography was being experimented with and in turn brought new and different ways of photo taking not only as documenting real time, but also conceptualizing a scene in which an image would be taken. Julia Margaret Cameron will

Similar Essays

The Case Against Goldman Sachs And Fabrice Tourre

1541 words - 6 pages Must Be Regulated Because They Have No Social Benefit: http://www.businessinsider.com/george-soros-cdos-are-dangerous-and-must-be-regulated-2010-4#ixzz2vkpn3ad7 http://www.businessinsider.com/george-soros-cdos-are-dangerous-and-must-be-regulated-2010-4 . Accessed 12th March 2014. https://mostlyeconomics.wordpress.com/2010/04/30/understanding-the-goldman-abacus-issue/ .Accessed 12th March 2014. Transcripts of thw white house report on the Volcker Rule http://www.whitehouse.gov/photos-and-video/video/volcker-rule-financial-institutions#transcript . Accessed 11th March 2014.

Goldman Sachs Essay

1794 words - 8 pages -dangerous-and-must-be-regulated-2010-4#ixzz2vkpn3ad7 http://www.businessinsider.com/george-soros-cdos-are-dangerous-and-must-be-regulated-2010-4 . Accessed 12th March 2014. https://mostlyeconomics.wordpress.com/2010/04/30/understanding-the-goldman-abacus-issue/ .Accessed 12th March 2014. Transcripts of thw white house report on the Volcker Rule http://www.whitehouse.gov/photos-and-video/video/volcker-rule-financial-institutions#transcript . Accessed 11th March 2014.

Banking And The Acquisition Of Toxic Assets By The Us Government

1461 words - 6 pages prohibiting banks from underwriting securities ; but in 1987 restriction were eased and in 1999 congress passed the Gramm-leach –Bliley act which basically repealed the Glass Stiegel. When the Federal Reserve converted investment banks into financial holding companies with access to the fed funds at good attractive rates. Glass Stiegel Light and Volcker rule arguing banks should not be permitted to invest own or sponsor hedge funds or private

Portfolio Selections Report – J.P. Morgan Chase & Co University Of Houston Victoria Research Paper

4555 words - 19 pages management of the company is to meet Basel III Tier I common ratio of 9.5% and 100% LCR. SEC and the federal banking agencies proposed regulations to implement the Volcker Rule in 2011. The Volcker Rule is a specific section of the Dodd–Frank Wall Street Reform and Consumer Protection Act that restricts US banks from making investments that do not benefit the customers of their bank. J.P. Morgan is in the process of complying with the new rules