Questions from Financial Markets

Q: Describe the Financial Services Modernization Act of 1999. Explain how it

Describe the Financial Services Modernization Act of 1999. Explain how it affected commercial bank operations, and how it changed the competitive landscape among financial institutions.

Q: Explain how the Sarbanes-Oxley (SOX) Act improved the

Explain how the Sarbanes-Oxley (SOX) Act improved the transparency of banks. Why might the act have a negative impact on some banks?

Q: Explain how the conversion of securities firms to a bank holding company

Explain how the conversion of securities firms to a bank holding company (BHC) structure might reduce their risk.

Q: Explain how the accounting method applied to mortgage-backed securities made

Explain how the accounting method applied to mortgage-backed securities made it more difficult for banks to satisfy capital requirements during the credit crisis of 2008–2009.

Q: Provide examples of off-balance sheet activities. Why are regulators

Provide examples of off-balance sheet activities. Why are regulators concerned about them?

Q: Should the Fed have the power to rescue firms such as Bear

Should the Fed have the power to rescue firms such as Bear Stearns that are not commercial banks?

Q: Explain how bank regulation can be more effective when there is consolidation

Explain how bank regulation can be more effective when there is consolidation of banks and securities firms.

Q: Explain how the TARP was expected to help resolve problems during the

Explain how the TARP was expected to help resolve problems during the credit crisis.

Q: Explain how the Financial Reform Act is intended to prevent some problems

Explain how the Financial Reform Act is intended to prevent some problems that contributed to the credit crisis.

Q: During some crises, investors shift their funds out of the stock

During some crises, investors shift their funds out of the stock market and into money market securities for safety, even if they do not fear that interest rates will rise. Explain how and why these a...