Financial regulations and their impact on global financial crisis-paper代写

留学生paper代写精选范文：“Financial regulations and their impact on global financial crisis”，这篇论文讨论了金融监管及其对全球金融危机的影响。如今金融行业虽然发展越来越繁荣，但由于金融监管的问题，使得全球金融还是会有一定的危机。对于金融监管，首先要确定一个负责人，这样才能为企业提供更好的激励行为。其次就是防止信息的遗漏和做好预防措施。

1.    Summary of the new policy

Nowadays, as the financial industry grows more and more prosperous, problems such as financial crisis due to insufficient regulations also arise. The US Justice Department is stepping in to ameliorate this problem and prevent future mass breakouts of financial crisis. The main goal for this new policy is to seek foraccountability; that is, picking out the individual that is responsible for any actions and consequences. The positive effects of this policy include: it deters future illegal activity, it provides corporates with incentives to behaviour better, and it ensures proper parties are held responsible for their actions. Furthermore, external benefits include enhancing the public’s confidence in the justice system.

However, it is difficult to find the person in charge in times of misconducts. Therefore, the Justice Department gathered a working group of senior attorneys to closely examine how firms conduct business to try to find the individuals responsible for corporate wrong doing. There six exact details for this procedure. The first section of this paper will analyse each individual step in details and explain how they will help to prevent the next global financial crisis.

2.    New policy in helping the financial crisis

a)    Corporations must provide to the Department all relevant facts relating to the individuals responsible for the misconduct to qualify for any cooperation credit(Yates, 2015, p. 3)

The fact that corporates must submit all the details and facts regarding the person responsible for one engagement prevents the firms from selecting the favourable facts to submit and neglecting other facts that could rise potential problems. Financial crisis occur, on a large scale, due to negligence of small details and intentionally leaving out some facts when the person in charge actually knows something wrong is going to happen. This act can do the best to allow the firms reduce the change of neglecting facts since everything is required to be submitted. Firms intentionally hiding information away from the attorney can also be solved because the attorneys have the right to proactively ask for information from the firm and firms should not reject to provide this information upon request.

b)    Criminal and civil corporate investigations should focus on individuals from the inception of the investigation(Yates, 2015, p. 4)

This act, by following closely on individual from the inception of the investigation, can be effective in preventing financial crisis because it can greatly reduce the chance of fraud or misconduct if someone is followed in the beginning. The individual might even be too scared of the punishment to have any incentive for misconduct. Even though crimes are not so easily caught in the beginning, by following closely from the start, the attorneys can have a better understanding of what individual is doing and stop the crime at an early stage if spotted early. Mass financial crisis breakout because sometime it is discovered very late, and by the time the regulatory boards really intends to do something, it is already too late. It is essential that preventive measures are taken from the beginning to spot and hinder a problem early.

c)    Criminal and civil attorneys handling corporate investigations should be in routine communication with one another(Yates, 2015, p. 4)

This act ensures that relevant information flows without hindrance to every party involved in the checking process. Sometimes crisis happen because while some parties are informed of certain issues, other subsequent parties are not informed in a timely manner, resulting in late actions or complete ignorance of relevant issues. By communicating routinely with each other, if there is a potential problem happening even in the earliest stage, both the criminal and civil attorneys will know about it and start to investigate. The financial crisis is not created by one person and therefore it will not be successfully prevented only with one party. Only by collaborating and communicating effectively with each other can we successfully stop a potential crisis.

d)    Absent extraordinary circumstances or approved departmental policy, the Department will not release culpable individuals from civil or criminal liability when resolving a matte with a corporation(Yates, 2015, p. 5)

This act can successfully prevent firms intentionally trying to cover up for a responsible individual. Crisis happen when staff of important positions act illegally, and then the corporate documents may have items trying to cover up for this important individual. With this act, this is not possible anymore and each individual is treated equal, no matter whether you are someone of significant importance or not. One cannot let the corporate pay for your wrong doings and shrink away from your responsibilities.

e)    Department attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases, and should memorialize any declinations as to individuals in such cases(Yates, 2015, p. 6)

This item ensures that every detail relating to each individual is resolved before the entire corporate should be settled in times of crime. This is similar to item d because it makes sure that a more junior level is cleared before moving on to the next senior level. By tracking down each level, the government can make sure that the final outcome is satisfactory. This item also eliminates the probability of corporates trying to cover up for specific or significant individuals working in a firm. Under this item, everyone is treated equal, no matter you are a manager or new entrant.

f)     Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay(Yates, 2015, p. 6)

This item is fair in that it judges people not their ability to pay back, but rather on the level of crime conducted. This prevents individuals who are poor and without assets trying to conduct a crime, thinking that he does not have the ability to pay back anyway. Or it could prevent rich people deliberately assigning poor individuals to do tasks of wrong doing for them, with the hope that those individuals are too poor to pay the amount that should be charged. The wrong doer might be thinking along the lines of, even though I am punished, but since I am not punished enough, then I actually profit from this action. This item makes sure that equality is imposed to all criminals alike, no matter what position in the society you are.

3.    Further measures

A balance between how much the governments should regulate the financial industry and to what extent the market should adjust itself is the key to finding the correct financial regulation regime to ensure an efficient and effective financial market. On the one hand, too little regulations provides the individuals incentive and opportunities to take advantage of arbitrage opportunities and make undeserved gains. On the other hand, too much regulation could hinder the development of the capital market and slow down economic growth. Currently, after the financial crisis of 2008, rules and regulations are tightening up in the financial industry to prevent future crisis. In this section, I will present more ideas and items that I think should be imposed to better regulate the financial industry. 

a)    First and foremost, I believe that credit loans should be further tightened because currently, there are still many banks that borrow excessively without actually using up all the funds. By tighten up, I mean to grant loans to actually meet the requirements of a bank, not too much and of course, not too little. For example, in the bank that I used to intern, their credit loans department was granted much more funds than the amount lent out in the end. By year end, they will encourage more borrowing if they still have left over money, creating in many people who could seek other cheaper means of funds borrowing from the bank with higher costs in the end. That bank also encounter years when they do not have too much to lend in Nov. or Dec. and had to cut the number of applicants applying for loans by screening their applications more carefully and rejecting many who actually needed a fund. By this item, I plan to distribute the fund better so that they are actually allocated to those really in need. Specifically, the bank can change its loan granting policy from once a year to once half a year so that they can better adjust the amount granted based on the demand. After all, it is easier to forecast a demand in the short term than forecasting the demand for the entire year. By improving the accuracy, the loans can be granted more efficiently.

b)    The second idea that I have is to alter the structure of firms a bit through a tax reform. Right now, the tax policy in many countries encourages firms to borrow more with debt instead of equity. However, as it is known to all, too much debt may increase the chance that the firm will not be able to pay back in the end. With more debt, the firm might be a very active firm and fully utilizes the opportunity to leverage up all of their investments, hoping for a high return. However, high return almost always comes with high risk. If the firm, even though a large amount of investment, cannot profit enough to pay back due to unforeseeable circumstances or market fluctuations, then this amount of debt will be hard to be paid back. So I propose that countries should enact a tax policy to encourage firms to borrow equity more than debt. Even though it might be more expensive, governments can adjust the level of value added tax to shift the corporate structure by letting the firm choose differently in what to borrow.

c)    Thirdly, I believe that the foreign exchange market and foreign subsidies is a difficult area to regulate because after all, it is further away from the country the parent company is in and one may encounter an entirely different set of policies in the new country. Nowadays, with more development in the financial industry and more kinds of derivative instruments coming up, people are having more and more ways to deal and play with money. Some firms acquire a small subsidiary in a country where the tax is significantly lower to avoid tax expense. Others trade and take arbitrage opportunities in the derivatives market by acquiring a subsidiary that operates in a country where the rules and regulations around derivatives are not so clearly mapped out. Of course, more severe cases happen when firms involve in money laundering and transfer funds to other countries. These actions should be strictly prohibited because it can create troubles with more countries involved. However, it is true that those kind of problems will be hard to solve since geographical, language, and culture barriers all lie between. It is unrealistic for all countries to adopt the same set of rules to avoid these kind of problems.So I recommend that international committees such as the World Bank or the United Nations can have a committee specializing in financial regulations. They can require all the firms doing business in alternative and derivatives to publicly disclose their returns, fee structures and accounting books.

d)    Next, I propose that within the US, the Federal Reserve should monitor the activities, interdependence, trends, and other significant issues of firms and institutions around the country. The Federal Reserve should be authoritative enough to significantly influence the behaviour of the banks and serve as a connection between those banks to unit and connect them more. It should also act as a surveillance between banks, reporting fraudulent activities and controlling the inappropriate moves. 

e)    Another important issue that has not been discussed much in past literature is lobbying and its transparency. According to past literature, lobbyists have to a large degree influenced corporate structure and the future of firms, so they are a group of people of apparent significance. They should be working with professionalism and according to the code of conduct for the industry. They should either follow the ethical codes in the financial industry such as those stated in the CFA exams, or they should have their own set of codes to follow suit. To ensure transparency, there should be a firewall between the lobbyists and the public sector so that the lobbyists can act with integrity. There should also be more diversity of background for the pool of participants engaged in lobbying so that they can cover a more comprehensive area and speak for a larger community.

f)     Since as I said in the beginning, more rules and regulations are likely to hinder economic growth, so this section will provide some ideas to stimulate long term economic growth. First, I believe that human capital and technological development are the two most important factors in long term economic growth. Technological development is a two-edged sword because it can profit us more and create more opportunities for wrong doing as well. New techniques such as high frequency trading and algorithmic trading has allowed people to increase their return; on the other hand, people can spot more arbitrage opportunities and make abnormal returns. It is hard to have policies saying that “no technologies can be developed with the intention of wrong doing” because technological development can always be out of human control and be designed and used in completely different ways. So for technology, I believe that punishment for wrong doing is the most effective way because one simply cannot stop its development.

For human capital, there could be a lot of policies issued so that more full time employment is encouraged to stimulate economic growth. This an aspect that not only deals with the financial industry because a financial crisis has influence on the overall economy and so everyone in the economy has the responsibility to prevent it. Employment policies should be made on a macroeconomic basis and not only focus on the financial industry. If the core economy is really strong enough, then a financial crisis will not be as devastating as the ones happened in history. Under this item, things can be done to promote more equality of worker welfare and increase working incentives by renovating the infrastructure or providing more subsidy for full time jobs.

g)    Last, but not least, I would like to emphasize the fact that the financial industry does not only belong to all those working in the industry, but also to every citizen and individual living on this planet because everyone is involved in the economy and no one can live in isolation. However, I believe that those not working in the financial industry, but especially those who needs to do business with this industry, often lacks sufficient knowledge to protect themselves from potential fraud. Not only those workers in the financial industry needs to correct their behaviours, but also the mass public needs to be better educated of some basic and fundamental financial knowledge. Everyone knows that education is important in shaping the future for the society, so I propose that more countries open up mandatory courses in basic finance, banking, or law in high school. Those courses should stress the importance and severity of illegal actions and possible consequences for committing fraud. I know that here in the US, such courses do exist, but in countries such as China, the mass public is often poorly educated of related knowledge. Even though this policy cannot stop wrong doings such as insider trading, it can at least scare away some boss in another industry who just received a huge amount of illegal money and wanting to contact a money laundering group to get the money out of sight. With less demand for illegal activities, there will be less supply of such group of people acting illegally.

Conclusion

In conclusion, the new policy has focused extensively on punishments and surveillance on the financial industry to ensure that stakeholders in the industry act with more integrity. The new policy mainly stressed the importance of the role of each individual and how regulations should keep a close eye on individuals to ensure overall firm compliance of rules. Although effective, I believe there are much more that needs to be done to avoid a future financial crisis. I have listed another seven areas to improve on to improve the economy as a whole. All in all, everyone involved in the economy should contribute what you can to its prosperity and stability. Let us all work hard to build a better financial industry in the future.

Reference

Mulcahy, S. (2015). Lobbying in Europe, hidden influence, privileged access. Transparency International. Retrieved from http://www.transparency.org/whatwedo/publication/lobbying_in_europe

OECD (2015), “How to restore a healthy financial sector that supports long-lasting, inclusive growth?”, OECD Economics Department Policy Notes, No. 27, June 2015. Retrieved from http://www.oecd.org/eco/finance-growth-inequality.htm

Stiglitz, J. (2015). Rewriting the rules of the American economy, an agenda for growth and shared prosperity. Roosevelt Institute. Retrieved from http://rooseveltinstitute.org/rewrite-rules/

Taub, J. (2015, May 7). Still too big to fail, opportunities for regulatory action seven years after the Bear Stearns rescue. Corporate Reform Coalition. Retrieved from http://www.citizen.org/documents/still-too-big-to-fail-crc-report.pdf

Volker Alliance. (2015). Reshaping the Financial Regulatory System, long delayed, now crucial. The Volker Alliance. Retrieved from https://volckeralliance.org/resources/reshaping-financial-regulatory-system

Yates, S. (2015, September 9). Individual Accountability for Corporate Wrongdoing. U.S. Department of Justice, Office of the Deputy Attorney General. Retrieved from http://corpgov.law.harvard.edu/2015/09/21/individual-accountability-for-corporate-wrongdoing/

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