Money and Banking: Analysis of Financial Regulations and Bank Reforms

This report delves into the intricacies of money and banking, offering a comprehensive analysis of the 2008 financial crisis and its profound impact on the American economy and the lives of millions. It examines the effectiveness of the Dodd-Frank financial regulatory structure, debating whether existing reforms adequately address total risk and financial consistency. The report explores the advantages of breaking up large banks, such as preventing collapses and managing complex institutions. It also discusses the unintended consequences of bank reforms, particularly concerning risk aversion and its effects on credit availability and innovation. Furthermore, it emphasizes the need for a holistic approach to bank regulations, considering broader economic impacts and compliance strategies. The analysis covers capital requirements, leverage ratios, and the safety of large banks, providing valuable insights into the current state of the banking industry and its regulatory landscape.

Money and Banking

TABLE OF CONTENTS
Question 1..................................................................................................................................3
Question 2..................................................................................................................................3
Question 3..................................................................................................................................4
Banks reform’s unintentional consequences:.........................................................................4
Requirement of A holistic approach to the regulations of bank.............................................4

QUESTION 1
The financial crisis in 2008 has significantly impacted on the economy of America and lives
of millions of people. The debate considers the central questions that the existing Dodd-Frank
financial regulatory structure post reforms are adequate to resolve the troubles of the total
risk, financial consistency and is too extended to fail, or a fundamental approach is necessary.
There are several advantages from big banks breaks, among all some of them are stopping a
big bank collapse that may give rise to one other financial crises like 2008, estimating that
these huge and difficult association can be efficiently handled, further decreasing the risk and
supporting the benefits that lead from their type as TBFT that is too big to fail associations.
However, the costs cannot be taken into effect (Hoskins, 2016).
By considering all the reasons, the major reason so fair is the probability that the collapse of
any of the big bank represent a risk to the consistency of United Stated financial system, and
the reason that they are mentioning is TBFT. From my point of view, is the basis severe
adequate to affirm the disorder and danger that could escort considerable big banks
downsizing.
QUESTION 2
In the financial crises, for the reduction in risks, there have been significant changes in the
regulation of financial institutions. For the improvement of banking regulations, government
spent millions and stiffened capital requirements that directly fortified the system.
Further, Regulatory capital enhanced, reduct6ion in leverage ratios and pressure difficulty
was sorted out to guarantees the safety regarding the rising levels of capital and reduction in
risks.
At present, big banks have contained minimum 5% of their due loans , for the regional banks
it is nearer to 2%in 2008, most of the large banks had 1/3rd loans in real estates (Kroszner,
2008). On the balance sheet of banks today, Morningstar bank analyst, James Sinegal said
that lending of energy has a quite minor percentage. In 2008 the areas to be concerned were
mortgage backed securities.
One other factor for the safety of large banks is the equity/capital amount which has been a
cushion against losses related to the loan. In this aspect, Bove said that Actually the amount

of equity is much more as loans and securities (percentage of assets) at present in comparison
to time since 1938.
QUESTION 3
Banks reform’s unintentional consequences
Unintended consequences are talking place from current reforms of banks. The major aspect
for banks spins around the aversion of risks. In the latest post crises of individual
accountability, often managers are not ready for the risk of pre crises that result in a reduction
in a number of expandable credits in fixed terms, and bank desire to increase credit to
borrowers having high risks (Kroszner, 2014). The holding of maximum capital tends to be
blamed or hold even more of responsibility. The result is an oppressive entrepreneurship and
innovation. Whereas regulators are responsible for managing conservative banking sectors, in
case new risks arise regulators are required to find out tools in order to determine them and a
relative answer through the current or new regulatory system
Requirement of A holistic approach to the regulations of bank
It is complex to manage compliance matters on the basis of a case by case rather that must
deal with the broader aspect of the banking services at the economies at large. Banks must
consider the agenda of the regulatory manner of holistic to make sure about the fulfilment
and also their personal growth and development (Kroszner, 2007). For the bank, regulatory
compliance is a duty; it also offers many opportunities to the banks to have a complete
outlook. The developing series of banking regulations, assessing of the matters are done
thoroughly, but the regulatory affairs must be firstly measured as an included factor for
planning.

REFERENCES
Kroszner, Randall S. "The effect of removing geographic restrictions on banking in the united
states: lessons for Europe." Financial Markets, Institutions & Instruments 17, no. 1 (2008): 5-
18.
Kroszner, Randall S., and Philip E. Strahan. "Regulation and deregulation of the US banking
industry: causes, consequences, and implications for the future." In Economic Regulation and
Its Reform: What Have We Learned? pp. 485-543. University of Chicago Press, 2014.
Kroszner, Randall S., Luc Laeven, and Daniela Klingebiel. "Banking crises, financial
dependence, and growth." Journal of Financial Economics 84, no. 1 (2007): 187-228.
Hoskins, M. Sean., The financial choice Act: Policy issues. Specialist in Financial
economics. 2016.