Why do we need stress tests? Since the financial crisis, stress tests have become the main instrument of bank supervision. In stress tests, supervision interacts with regulation and bank capital requirements. Research highlights the role of stress-test supervision in dampening the incentives of banks to take risks, especially when capital requirements are not effective.
Ten years ago, the 2008 financial crisis not only made headlines – it also signaled a fundamental shift in how the global banking system operates. Several regulations were put into effect to increase transparency and protect global markets
In March, the US Senate reformed the 2010 Dodd-Frank Act by loosening its tight regulations on smaller financial organizations, welcome relief for those firms that have been struggling for eight long years with requirements targeted for larger, systemically important institutions during the aftermath of the 2008 financial crisis. Most are upbeat about the Senate bill, but how will it fare in the House of Representatives?
Banks may see a benefit in political involvement, but it also brings risks of influencing political decisions, especially legislations and regulations that would affect their businesses, but this ideal may not line up with the reality. The public’s skepticism of banks’ integrity has not improved much recently—in large part due to their relative lack of transparency regarding their political engagement, as transparency studies show.
In mid-April, a draft of the legislation to repeal the Dodd-Frank Wall Street Reform and Consumer Protection Act—a law that has been branded by US President Donald Trump as a “disaster” that has made it difficult for businesses to get loans—was released.
During his campaign, US President Donald Trump was short on praise for Federal Reserve Chair Janet Yellen. But since taking office in January, he has softened his public remarks about her low interest-rate policies, and there is even the possibility that he might re-nominate her in 2018. Would the reappointment of an avowed monetary-policy dove work for or against his economic plans in the future?
The November elections are soon approaching for Americans, and it now looks increasingly like a two-horse race for the US presidency. Both Hillary Clinton and Donald Trump have emerged as clear contenders in the last few weeks, leaving their rivals by the wayside.