Presentation Title

Volcker Rule and the Housing Crisis

Start Date

November 2016

End Date

November 2016

Location

Watkins 1117

Type of Presentation

Oral Talk

Abstract

The housing crisis in 2008 was the most prevalent economic blow ever since the Great Depression in the history of the U.S.; hundreds of thousands of Americans became homeless. While Americans suffered, these “too big to fail banks” stayed afloat because of federal support. Many economists discuss how this whole traumatic incident could have been easily prevented with changes in government policies and regulations. The Volcker Rule is an economic policy that was implemented as a preventative measure that would have avoided this. Discussions of the Volcker rule started out in 2009, and since have significantly changed due to the lobbying in the Congress. The Volcker rule prohibits banks from being involved in proprietary trading and obtaining substantial amounts of equity in a hedge fund. However, if the Volcker rule were established in its original form and before the housing crisis, the financial crisis could have been avoided. Some prominent economists, politicians, and American public want to see more transparency in the financial markets, which is what the economy is in need of, rather than a gambling culture disguised as financial derivatives. With the Dodd-Frank bill reinstated there is some hope. However, through lobbying and mere cosmetic changes in regulation in the financial markets the Dodd-Frank Bill and Volcker Rule are not effective in doing what they were designed to do. This paper will argue that without serious reforms in the Volcker rule and the Dodd-Frank bill, there will be no real preventative changes. Therefore, without a serious reform in the present culture of Wall Street, another repeat of the financial meltdown is in the cards.

This document is currently not available here.

Share

COinS
 
Nov 12th, 2:30 PM Nov 12th, 2:45 PM

Volcker Rule and the Housing Crisis

Watkins 1117

The housing crisis in 2008 was the most prevalent economic blow ever since the Great Depression in the history of the U.S.; hundreds of thousands of Americans became homeless. While Americans suffered, these “too big to fail banks” stayed afloat because of federal support. Many economists discuss how this whole traumatic incident could have been easily prevented with changes in government policies and regulations. The Volcker Rule is an economic policy that was implemented as a preventative measure that would have avoided this. Discussions of the Volcker rule started out in 2009, and since have significantly changed due to the lobbying in the Congress. The Volcker rule prohibits banks from being involved in proprietary trading and obtaining substantial amounts of equity in a hedge fund. However, if the Volcker rule were established in its original form and before the housing crisis, the financial crisis could have been avoided. Some prominent economists, politicians, and American public want to see more transparency in the financial markets, which is what the economy is in need of, rather than a gambling culture disguised as financial derivatives. With the Dodd-Frank bill reinstated there is some hope. However, through lobbying and mere cosmetic changes in regulation in the financial markets the Dodd-Frank Bill and Volcker Rule are not effective in doing what they were designed to do. This paper will argue that without serious reforms in the Volcker rule and the Dodd-Frank bill, there will be no real preventative changes. Therefore, without a serious reform in the present culture of Wall Street, another repeat of the financial meltdown is in the cards.