Cbm Chapter2 Essay

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C H A P T E R T W O The Impact of Government Policy and Regulation on the Financial-Services Industry Key Topics in This Chapter • • • • • • • • • • The Principal Reasons for Banking and Financial-Services Regulation Major Financial-Services Regulators and Laws The Riegle-Neal and Gramm-Leach-Bliley (GLB) Acts The Check 21, FACT, Patriot, Sarbanes-Oxley, Bankruptcy Abuse, Federal Deposit Insurance Reform, and Financial-Services Regulatory Relief Acts Emergency Economic Stabilization Act and the Global Credit Crisis FINREG is passed into law to avoid severe disruption in the financial system and deal with systemic rick Some Key Regulatory Issues Left Unresolved The Central Banking System Organization and Structure of the Federal Reserve System and Leading Central Banks of Europe and Asia Financial-Services Industry Impact of Central Bank Policy Tools 2–1 Introduction Some people fear financial institutions. They may be intimidated by the power and influence these institutions seem to possess. Thomas Jefferson, third President of the United States, once wrote: “I sincerely believe that banking establishments are more dangerous than standing armies.” Partly out of such fears a complex web of laws and regulations has emerged. This chapter is devoted to a study of the complex regulatory environment that governments around the world have created for financial-service firms in an effort to safeguard the public’s savings, bring stability to the financial system, and, hopefully, prevent abuse of 27 28 Part One Introduction to Banking and Financial Services financial-service customers. Financial institutions must contend with some of the heaviest and most comprehensive rules applied to any industry. These government-imposed regulations are enforced by federal and state agencies that oversee the operations, service offerings, performance, and expansion of

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