Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

10 years ago, at a seminar with international financial officials, Timothy Geithner, who was then President of the New York Federal Reserve, referred to the

10 years ago, at a seminar with international financial officials, Timothy Geithner, who was then President of the New York Federal Reserve, referred to the financial crisis that had just hit the United States in past tense, wrongly assuming that the worst was over. In his 2015 book Stress Test: Reflections on Financial Crises, Mr. Geithner corrected himself and called the events of late 2007, which included the near collapse of the largest mortgage lender in the US, left of the boom, a term used to describe the time before an improvised explosive device actually explodes. The unprecedented devastation of the financial sector the following year, beginning in the United States (US) and quickly spreading across the world caught regulators off guard and ended up destroying countless lives. To prevent the next crisis, regulators need to have oversight of the entire financial system, and a simple governance structure with clear lines of accountability. Regulation cannot prevent the evolution of financial products. The key, instead, is for regulators to have the foresight to predict the next bubble that could bring down the entire economy and burst it in its infancy. Mr. Geithner, who went on to help President Barack Obama battle the financial crisis as his Treasury Secretary, reflected later that the current oversight regime (in the US) was a ludicrously balkanized mess. Consolidating and streamlining regulatory functions would have seemed logical after the global financial crisis exposed how vital signs were missed and leverage was allowed to pile up outside the traditional banking sector. However, a decade later, the Securities and Exchange Commission and the Commodity Futures Trading Commission in the US remain separate despite significant overlap in their mandate. Similarly, regulation of depository institutions remains split between the Office of the Comptroller of the Currency, Federal Deposit Insurance Cooperation and Office of Thrift Supervision. A working model of a streamlined and consolidated financial regulatory system may come from Singapore. In Singapore, the entire financial sector is regulated by one entity, the Monetary Authority of Singapore (MAS). In addition, MAS is also a central bank and in charge of developing the financial industry. MAS is also one of the few central banks and financial regulators in the world that sit very much within government, as a statutory body reporting directly to the Prime Minister. Unsurprisingly, during the 2008 financial crisis, countries like [] Singapore found themselves a step ahead in their response. Subsequently, many economists encouraged greater collaboration between central banks, regulatory authorities and the government to maintain financial stability and respond quickly in the event of a crisis. Adapted for academic purposes: The 3 Cs of financial regulation by Chirag Agarwal - Published 01 November, 2017 The article The 3 Cs of financial regulation compares the respective regulatory models in the US and the Singapore financial industry. (a) Determine the advantages and drawbacks of a sectoral approach of regulation of the financial markets as exemplified by the US. (Maximum 500 words) (10 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Working Capital Management And Finance A HandBook For Bankers And Finance Managers

Authors: R.K.Gupta, Himanshu Gupta

4th Edition

1645875547, 9781645875543

More Books

Students also viewed these Finance questions

Question

What did it want Mark Lewis to say?

Answered: 1 week ago

Question

7. How does each of these characters achieve epiphany?

Answered: 1 week ago