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Entries in Financial Regulators (2)

Saturday
Sep152012

US Economy Still at Grave Risk on 4-Year Anniversary of Lehman Brothers Collapse

Chris Hondros/Getty Images(NEW YORK) -- Just in the time for the four-year anniversary of the collapse of Lehman Brothers, a report concludes that the U.S. financial crisis has cost the country $12.8 trillion.

Better Markets, a nonprofit organization whose self-described mission is to "promote the public interest in financial reform," estimated the cost of the "Wall-Street caused financial collapse and ongoing economic crisis" using figures from the Congressional Budget Office and Gross Domestic Product estimates from the U.S. Bureau of Economic Analysis.

Lehman Brothers, the financial services firm, filed for bankruptcy Sept. 15, 2008, with about $691 billion in assets, the largest bankruptcy in U.S. history.

Dennis Kelleher, CEO of Better Markets and co-author of the report, said his organization timed its release with the anniversary to influence lawmakers to focus on tighter regulations.

"The message isn't to banks. It's to policy makers," Kelleher said. "If you look at the economic wreckage and suffering of the American people through the worst economy since the Great Depression, and see that it caused trillions of dollars. The priority has to be preventing this from ever happening again."

Kelleher admitted that the $12.8 trillion figure is an estimate and not a comprehensive figure.

He makes clear that the report does not insist "there's only one way to do this."

Kelleher believes, "The most important part of financial reform is regulating ‘too big to fail’ banks, so that if they fail, they fail without causing a collapse of the financial system or an economic crisis."

Copyright 2012 ABC News Radio

Tuesday
Jan182011

Financial Regulators Approve Plan for Implementing Volcker Rule

Photo Courtesy - Getty Images(WASHINGTON) -- Top financial regulators approved recommendations on how to implement the Volcker Rule, which intends to keep government-backed banks from engaging in speculative and risky activities by prohibiting banking entities from conducting proprietary trading and limiting investments in hedge funds and private equity.

In its third public meeting, the Financial Stability Oversight Council approved an 81-page study outlining several measures for implementing the rule, from performing quantitative analysis to detect proprietary trading to establishing a compliance regime which would require CEOs to vouch for the regime’s effectiveness.

The study was required by the Dodd-Frank Wall Street reform law enacted last summer as a means of determining how to turn the rule into legislation.

The key measures detailed in the study consist of the use of quantitative methods to identify trends in trade activity that may be consistent with proprietary trading; the employment of a “basket of metrics” to identify prohibited activity, among which would require the categorization of trade as either customer-initiated or trader-initiated; the monitoring of an internal compliance regime by supervisors and CEOs; and the prohibition of banks from investing in hedge funds or private equity funds and requiring banks to disclose any exposure to these funds.

The release of the study acts as a road map for implementing the Volcker Rule.  Regulators will consider the council’s recommendation and will have nine months to develop the final rules for implementation.

Copyright 2011 ABC News Radio







ABC News Radio