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Dodd–Frank Wall Street Reform and Consumer Protection Act

Dodd–Frank Wall Street Reform and Consumer Protection Act
The Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111–203, H.R. 4173; commonly referred to as Dodd-Frank) was signed into federal law by President Barack Obama on July 21, 2010 at the Ronald Reagan Building in Washington, DC.[1] Passed as a response to the Great Recession, it brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression.[2][3][4] It made changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation's financial services industry.[5][6] As with other major financial reforms, a variety of critics have attacked the law, some arguing it was not enough to prevent another financial crisis or more "bail outs", and others arguing it went too far and unduly restricted financial institutions.[7] Origins and proposal[edit] Share in GDP of U.S. financial sector since 1860[9] Overview[edit] Duties[edit] Related:  EconomyFinancials

Glass–Steagall Act The term Glass–Steagall Act usually refers to four provisions of the U.S. Banking Act of 1933 that limited commercial bank securities activities and affiliations within commercial banks and securities firms.[1] Congressional efforts to “repeal the Glass–Steagall Act” referred to those four provisions (and then usually to only the two provisions that restricted affiliations between commercial banks and securities firms).[2] Those efforts culminated in the 1999 Gramm–Leach–Bliley Act (GLBA), which repealed the two provisions restricting affiliations between banks and securities firms.[3] [edit] The sponsors of both the Banking Act of 1933 and the Glass-Steagall Act of 1932 were southern Democrats: Senator Carter Glass of Virginia (who in 1932 had been in the House, Secretary of the Treasury, or in the Senate, for the preceding 30 years), and Representative Henry B. Steagall of Alabama (who had been in the House for the preceding 17 years). Legislative history of the Glass–Steagall Act[edit]

Value-at-Risk (VaR) EmailShare Value-at-risk (VaR) is a prob­a­bilis­tic met­ric of mar­ket risk (PMMR) used by banks and other or­ga­ni­za­tions to mon­i­tor risk in their trad­ing port­fo­lios. For a given prob­a­bil­ity and a given time hori­zon, value-at-risk in­di­cates an amount of money such that there is that prob­a­bil­ity of the port­fo­lio not los­ing more than that amount of money over that hori­zon. For ex­am­ple, if a port­fo­lio has a one-day 90% value-at-risk of USD 3.2 mil­lion, such a port­fo­lio would be ex­pected to not lose more than USD 3.2 mil­lion, nine days out of ten. Dif­fer­ent choices for the prob­a­bil­ity and time hori­zon cor­re­spond to dif­fer­ent value-at-risk met­rics. a time hori­zon—one trad­ing day in our ex­am­ple;a prob­a­bil­ity—90% in our ex­am­ple;a cur­rency—USD in our ex­am­ple. We name a value-at-risk met­ric by list­ing those three items fol­lowed by “VaR”, so the value-at-risk met­ric of our ex­am­ple is called one-day 90% USD VaR. Notes Ref­er­ences

Derivative (finance) Many money managers use derivatives for a variety of purposes, such as hedging — by taking a position in a derivative, losses on portfolio holdings may be minimized or offset by profits on the derivative. Likewise, derivatives can be used to gain quicker and more efficient access to markets; for example, it may be easier and quicker to purchase an S & P 500 futures contract than to invest in the underlying securities.[3] Derivatives are a contract between two parties that specify conditions (especially the dates, resulting values and definitions of the underlying variables, the parties' contractual obligations, and the notional amount) under which payments are to be made between the parties.[4][5] The most common underlying assets include commodities, stocks, bonds, interest rates and currencies, but they can also be other derivatives, which adds another layer of complexity to proper valuation. Still, even these scaled down figures represent huge amounts of money.

The Sarbanes-Oxley Act 2002 The Occupation - Erik Tarloff - National Public protest isn't about anything as mundane as ten-point programs and lists of demands A little girl holds a placard during an Occupy Wall Street protest at Times Square in New York / Reuters The lead headline on the front page of Saturday's "Business Day" section of the New York Times: "In Private, Wall St. Bankers Dismiss Protesters as Unsophisticated." Is it possible to imagine a more obnoxious response to the Occupy Wall Street movement? "Sophistication" is of course a word defined by these bankers as seeing things precisely their way, as buying into the whole rigged system that the movement exists to protest. We've seen this sort of thing before, of course: Henry Kissinger regarded the anti-nuclear movement as naive. Which is not to say the movement isn't incoherent, inconsistent, and lacking a clear program. Popular protest isn't about a neat, discrete set of demands, even when it pretends to be. Every protester may have his or her own proposed solution.

Sarbanes–Oxley Act The bill was enacted as a reaction to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These scandals cost investors billions of dollars when the share prices of affected companies collapsed, and shook public confidence in the US securities markets. The act was approved by the House by a vote of 423 in favor, 3 opposed, and 8 abstaining and by the Senate with a vote of 99 in favor, 1 abstaining. President George W. In response to the perception that stricter financial governance laws are needed, SOX-type regulations were subsequently enacted in Canada (2002), Germany (2002), South Africa (2002), France (2003), Australia (2004), India (2005), Japan (2006), Italy (2006)[citation needed], Israel[citation needed] and Turkey[citation needed]. Debate continued as of 2007 over the perceived benefits and costs of SOX. Major elements[edit] Timeline and passage of Sarbanes–Oxley[edit]

Trust Bust: Why No One Believes the Banks Note: The Trade is not subject to our Creative Commons license. By almost any measure, Morgan Stanley is fine. Look at this impressive rundown of the bank’s critical numbers and ratios compiled by Paul Gulberg, an investment-banking analyst with the independent research firm Portales Partners. Morgan Stanley has much more capital and lower leverage than it did at the height of the financial crisis, which I like to think of as 9/08. It has almost $60 billion in common equity, compared with $36 billion before September 2008, and its ratios are stronger. Yes, Morgan Stanley by any measure is a safe and solid investment bank. That’s why the bank’s shares are down 42 percent this year. True, they start their next round of quarterly reporting in a matter of days. But the essential problem will still be there, a slow burn beneath the global financial system that flares up at the worst moments. Three months ago, the Belgian bank Dexia passed the European stress tests.

J.P. Morgan | Back Testing Value-at-Risk by Romain Berry J.P. Morgan Investment Analytics & Consulting romain.p.berry@jpmorgan.com This article is the sixth in a series of articles exploring risk management for institutional investors. Over the past five articles, we have covered the basics about computing Value-at-Risk (VaR) to assess the market risk of a portfolio of traditional financial instruments. We explained at a high level the pros and cons of the three main methodologies, namely Analytical, Historical and Monte Carlo Simulations. Background Back Testing is a technique used to reconcile forecasted losses from VaR with actual losses at the end of the time horizon (generally 1 day, 1 week, 2 weeks, 1 month, 1 quarter, 6 months or 1 year). In cases where the VaR has been underestimated and thus when the portfolio has experienced a loss greater than VaR, we say that VaR has been "breached", and such an event is called a "breach" or "violation" of VaR. We reproduce in Exhibit 1 the graph of a Back Testing exercise.

It’s hard to hate these occupiers By the hoary conventions of American politics, Americans should fear and loathe Occupy Wall Street. The occupiers are vaguely countercultural, counterculturally vague. They are noisy. And yet, they don’t. Gallery Video The former House speaker doesn't like protesters who "trash the place." In the strange case of Occupy Wall Street, none of the usual cultural signifiers by which we’ve been conditioned to hate one another seems to be working. What gives, I suspect, is that most Americans don’t particularly care what the demonstrators in downtown New York and other cities look like or believe in. For good, historically specific reasons, everybody hates the banks. Whence this fall — if not from grace (a state that few of us, and even fewer bankers, attain), then from the occasional decent opinion of humankind? The original J.P. So Occupy Wall Street espouses a fuzzy radicalism? meyersonh@washpost.com

Financial Risk Management 1.9.4 Emer­gence of Risk Man­age­ment In 1990, risk man­age­ment was novel. Many fi­nan­cial firms lacked an in­de­pen­dent risk man­age­ment func­tion. This con­cept was prac­ti­cally un­heard of in non­fi­nan­cial firms. risk re­duc­tion through safety, qual­ity con­trol, and haz­ard ed­u­ca­tion; andal­ter­na­tive risk fi­nanc­ing, in­clud­ing self-in­sur­ance and cap­tive in­sur­ance. Such tech­niques, to­gether with tra­di­tional in­sur­ance, were col­lec­tively re­ferred to as risk man­age­ment. More re­cently, de­riv­a­tive deal­ers had been pro­mot­ing “risk man­age­ment” as the use of de­riv­a­tives to hedge or cus­tomize mar­ket risk ex­po­sures. The new “risk man­age­ment” that evolved dur­ing the 1990s is dif­fer­ent from ei­ther of the ear­lier forms. On Jan­u­ary 30, 1992, Ger­ald Cor­ri­gan, Pres­i­dent of the New York Fed­eral Re­serve, ad­dressed the New York Bankers As­so­ci­a­tion. … the in­ter­est rate swap mar­ket now to­tals sev­eral tril­lion dol­lars.

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