President Obama and the Financial Reform Research Paper

President Obama and the financial Reform - Research Paper ExampleIt has also enacted the Volcker Rule based on the advice of Paul Volcker a spring Federal Banks Chairman and headed Obamas Economic Recovery Advisory Board. Although many are skeptical of the features and progress of the new Act, the law is unsounded to be more stringent on the unregulated trading and risk-taking by the financial corporations. There have 3 major financial reforms in US history preceded by the recessionary phases and accounting scandals. First, the US economy face the worst financial crisis since the Great Depression in 1929 as a forget of which the Glass Steagall Act came into existence in 1933 which legislated the separation of commercial banks from investment banks. Senator Carter Glass was responsible for bringing the Act who believed that the commercial banks school involvement with dealing in corporate securities was a threat to the financial system stability. Since then it has been the topic of research for many economists (Clark, p.205). Second, in 2002 the Sarbanes Oxley Act was write in the wake of global corporate and accounting scandals such as Enron, WorldCom and Tyco International (Slander, p.1). The Act contains provisions of corporate governance and auditors liberty and led to the creation of quasi-public agency Public Company Accounting Oversight Board which was responsible for regulating and overseeing the accounting firms as external auditors. Third, the most serious reforms, the Dodd-Frank Wall Street Reform & Consumer Protection Act has been enacted in 2010 by President Barack Obama and his administration. The law has led to the creation of two important oversight bodies- Financial Stability Oversight Council and Consumer Financial Protection Bureau. The new Act is considered by many to be based on the Glass Steagall Act. planetary Financial Crisis 2007-2010 The Global financial crisis started with the bankruptcy of investment bank Bearn Stearns Inc i n 2007 due to heavy exposure to mortgage-backed securities, central to the subprime mortgage crisis. The bank was sold to JP Morgan Chase. Then the collapse of Lehman Brothers, the ordinal largest bank in America was followed, which unfolded the global financial crisis. All those financial institutions which had exposures to the collapsed banks short-term assets faced the liquidity crunch. The largest insurance firm AIG faced the liquidity crisis in 2008 because its credit ratings were downgraded.