Legal Aspects of International Finance: US Economy and Regulations

This report provides a comprehensive analysis of the legal aspects of international finance, with a specific focus on the US economy and the impact of the global financial crisis. It begins by identifying the key issues and crises within the US economy, including the subprime mortgage crisis and the failures of financial institutions. The report then explores the modifications made to the US regulatory system in response to the crisis, such as changes to lending practices, tax policies, and capital requirements. Furthermore, it evaluates the effectiveness of these changes, examining their impact on financial stability and economic recovery. The report concludes by summarizing the key findings and offering insights into the evolving landscape of international finance and regulation. It also discusses the importance of transparency, risk management, and the role of government and regulatory bodies in preventing future financial crises. This report is a valuable resource for students studying finance, economics, and related fields, offering a detailed understanding of the legal and regulatory framework governing the global financial system.

Legal Aspects of
International Finance.

Table of Contents
INTRODUCTION...........................................................................................................................3
Main body .......................................................................................................................................3
Identification of crisis in U.S. Economy. ....................................................................................3
Modification to the US regulatory system. .................................................................................5
Effectiveness of the changes to the U.S economy.......................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Global financial crisis are termed as worldwide period of economic difficulty that have
been experienced by large number of consumer and markets. It is a situation when potential
customer tends to avoid their purchase regarding different goods and services offered by various
seller (Castles, Haas and Miller, 2013). After GFC there have been large number of changes that
have been done by higher authority of US regulatory. In this project different modification after
global financial crisis have been identified and analyses the effectiveness of these changes.
Main body
The proposes for regulatory movement that begins with the measurement that financial
problems and fright cannot be passed away and are consider to be unavoidable feature of modern
market economy. So it has been noticed that regulators are considering various action that are
related to lending practices, tax policies, credit polices, education programs and licensing. It has
been observed that regulation made by legal bodies could impact the nature, regulatory and
transparency in reporting that has been require for the legal entities and securities. After the
situation of global financial crisis the U.S president and other legal adviser established a chain of
useful regulatory proposal at the end of financial year 2009. The substance address customer
protective covering, bank financial conditions, capital requirement, enhanced regulation of the
shadow banking scheme and beginning of the authority for the Federal Reserve.
Identification of crisis in U.S. Economy.
In present time, it is very important for the researcher to identify the problem and issues
in the economy of nation that may be one of the largest reason for the reduction in growth and
development. Financial crisis have a huge impact on the business of nation and also reduces the
spending power of consumer. As the prefer to buy product when the economy condition's are
improved that may affect the business of small and large enterprise operation in that economy.
So it is essential, before making hope to manage the risk of different crisis in effective manner
there is a need to define and calculate the impact of those risk in proper way. Thus, it is stated
that first step of business is to design new regulation and create a formal explanation of in order
risk and to develop particular measure that are sufficiently applicable and making them in use by
various policy maker and the general public. Therefore there has been different issues that have
been identified by the U.S regulatory system that have been discussed below:

 It has been observed that most important regulatory change in accordance to the financial
system is related to provide the general people with the actual information about those
institution that have been failed in one manner or another (Crisis in U.S economy, 2013).
 It has been identified that actual and current financial problem is a mystery and
conceptual such as subprime security interest, credit default swap and the seizing up of
one of the largest credit market that develop the confusion and fear among common
people of U.S.
 During the financial crisis situation it has been observed that current generally accepted
accounting principle and various accounting method are old and backward looking that
are not helpful in identification of accounting risk. This is consider to be important
because accounting measure are the only primary sources that help the internal manger of
company to make corporate decision and benefit other requirement of company.
 The most important dislocation stemming from the financial problems of the financial
year is related to shadow hedge fund system. It was observed that different bank of
U.S,various insurance companies and money lender have to take huge risk than actual
they were prepared to get back form these calculated risk.
 It have been consider that human behavior are consider to be one of the dynamic for the
functioning of organization either private or public. Therefore during the financial issue
the company tends to increase their prices of different product that were more in demand.
This will influence the customer and they drop the thought to buy product at a particular
period of time.
So, it has been stated that legal authority of U.S regularities system have identified
different financial crisis. These issue need to be resolve as soon as possible by implementing
different plans, strategies etc. Thus it is very important for the corporate bodies needs to revised
to allow more independence of the risk management function. For example by hiring the chief
risk managers those are responsible to directly give useful and beneficial information to the
board of directors. They are also liable to control different situation and risk factor within
economy that may hamper the economic stability.
Modification to the US regulatory system.
During financial globalization is has been change to the new growth an prosperity around
the whole world (Dolzer and Schreuer, 2012). It is have been triggered a global economic

recession that have been resulted in in large trillion of losses, unemployment rate have climbed
to more than 10% in united state, poverty increased and most important the stock market of
whole world have been crashed. Regulation is said to be indispensable to the overall functions of
economies and society (Nobes, 2014). The financial crisis was destined to bring specific
fundamental changes in the world economic system. In order to develop further, the world
economy requirements are based on the qualitative changes. There are certain limits to reform in
the current global economic system, but at no other time in the last cost of century is having
those limits under the control of the UK government. There are specific regulations that are made
as a results of the serious downfall in the global markets and also because of the relative strength
of the banking sectors (Dunning, 2013). It is quite possible that the emerging economies will be
increasingly provide proper shape the future of global finance just as they are already moving the
direction of global trade. Because of the Global financial crisis the European countries slipping
under the entire down recession, Import and exports that have run into tough time.
Hence, October production sectors like leather, textile, gems and other precious jewelry
that have been hit hard because of the demand in the market. The federal reserve that has been
extremely active in making that the financial system tends to continue overall functions during
the time of financial crisis. The federal reserve has been considered as key rates to provide
additional liquidity to the financial system that can expanded the wide range of collateral that
would be willing to accept in return for loan and provided forward lines of credit to the broader
variety of financial institutions. There have been different steps that have been taken by legal
bodies such as:
 Expand the federal deposits insurance corporation bank that are focused to involve non
bank financial bodies (Maimbo and Melecky, 2014.).
 To make sure that entities are allowed to fail in an systematic manner that do not have the
way not be rescued.
 They have to adopt accurate checks and balances to the FDIC and different reserve that
are made by Federal during the resolution process of different financial issues.
 Ensure that there must be strong capital and liquidity position requires by the various
financial institution and connected regulatory authority.

Effectiveness of the changes to the U.S economy.
It is have been observed that modification made related to different financial issues have
positive impact on the economy condition of U.S economy. Such as:
 The main renovation in the regulatory infrastructure for different companies is requires to
simplify compliance, re align the need of capital that are according to the rules and
liquidity risk. It is also important to revised the current bank rules and regulation that is to
permit the pre packaged bankruptcies for different bank operation their services in United
state, to various insurance companies, large and medium broker and dealer and to other
financial organization that were facing unusual high cost of financial distress. Thus it will
have the positive impact on different financial companies that are operating various
banking services in economy (Nanda and Pring, 2012).
 Providing information to the public about the organisation that have major financial crisis
, that creating unfavourable conditions for investors and at the stage of winding up, is one
of the most crucial change in US regulatory in the context of financial system.
Government took this step by developing an independent investigatory agency or
department patterned after the National Transportation Safety Board (NTSB), e.g. a
Capital Markets Safety Board (CMSB), that has a well functioning and experienced team
of forensic accountants, lawyers, and financial advisors, those who fired out of such
failed financial institution and provides a publicly available report that exhibits the details
of each failure and provides recommendations for avoiding such similar conditions in
future. Under this change in US regulatory system, these organisations prevents any
potential miss-happenings like global crisis and works as a shield of financial sector of
nation.
 After global crisis US government had set a crisis management protocol under which for
fearless and effective communication of policies regarding sub prime mortgages,
collateral debt obligations (CDOs), credit default swaps (CDS), and restructuring of
credit markets, with public; government formed a dedicated inter-agency team of public
relations professionals. Organisation like CMSB is established for this purpose, which is
responsible for maintaining records of companies still suffering from global crisis,
measures and controls systematic risks with the help of various analysis and participates
in deep research on issues related with systematic or organised risks.

 A significant change in generally accepted accounting principles was made by relevant of
government for creation of more transparency in accounting techniques and policies
criteria. These changes adopted by US regulatory system is presently accepted by
countries all over the world. Such changes in accounting principles helps in detection of
frauds, maintains credibility of financial statements and gives more controls to auditor or
investigators of financial data .
CONCLUSION
From the above report, it have been concluded that financial crisis are defined as situation
that may influence the purchasing power of customer because of increasing prices of different
product. Financial crisis are the situation that may reduce the profitability of economy so they
must be overcomes in a systematic manner. Different issues were faced by U.S economy and
proper modification were made that have positive impact on the U.S. economic conditions.

REFERENCES
Books and Journals:
Castles, S., De Haas, H. and Miller, M. J., 2013. The age of migration: International population
movements in the modern world. Macmillan International Higher Education.
Dolzer, R. and Schreuer, C., 2012. Principles of international investment law. Oxford University
Press.
Dunning, J. H., 2013. International Production and the Multinational Enterprise (RLE
International Business). Routledge.
Maimbo, S. M. and Melecky, M., 2014. Financial sector policy in practice: benchmarking
financial sector strategies around the world. The World Bank.
Nanda, V. and Pring, G. R., 2012. International environmental law and policy for the 21st
century. Martinus Nijhoff Publishers.
Nobes, C., 2014. International classification of financial reporting. Routledge.
Online
Crisis in U.S economy. 2013. [Online]. Available
through:<https://www.imf.org/external/np/pp/eng/2009/020409.pdf>