Financial Markets
Daniel J Cross
Dr. Virginia Rae
BUS 100-100F
10/20/2015
Financial Markets
Stock Index: “A statistic that tracks how the prices of a specific et of stocks have changed” (Kelly & Williams, 2015 p. 170).
Stock Exchange: “An organized venue for trading stocks and other securities that meet its listing requirements” (Kelly & Williams, 2015 p. 166).
Securities and Exchange Commission: “The federal agency with primary responsibility for regulating the securities industry” (Kelly & Williams, 2015 p. 167).
The Financial Stability Oversight Council was established by the Dodd-Frank Act in 2010. It was founded as a result of the drastic drop of the housing market and stock index in 2008. This council is manned by fifteen members, ten of which have the capacity to vote and the other five act as advisory members. This council reports to congress and is held accountable for identifying threats to America’s financial stability. The Dodd-Frank act brings rules and bylaws to regulate the marketplace. There are thirty eight areas that this act cites as needing rules and improvement. The council operates by creating committees to solve particular problems. Each persons and agencies relevance to the problem at hand determines how involved they are in the committee and their overall goal is to make the stock exchange a less risky endeavor with less risk to the US economy.
There are ten members of the council, of these ten member the Secretary of Treasury serves as the chairperson of the council. There are ten voting members of the council: The chairman of the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, Director of the Bureau of Consumer Financial Protection, the Chairman of the Securities and Exchange Commission, the Chairperson of the Federal Deposit Insurance Corporation, the Chairperson of the Commodity Futures Trading Commission, the Director of the Federal Housing Finance Agency, the chairman of the National Credit Union Administration, and an independent member with insurance expertise who is appointed by the president and confirmed by the senate for a six year term. These ten members vote on matters and also are responcible to listen to the advice and information given by the five advisory members. These five members are the Director of the Office of Financial Research, the Director of the Federal Insurance Office, a state insurance Commissioner designed by the state insurance commissioners, a state banking supervisor designated by the state banking supervisors and a state securities commissioner designated by the state securities commissioners. The current Chairperson of the council is Jacob J. Lew. As of right now every voting member of the council is a democrat. This is concerning to not have both parties represented in such a vital council (Financial Stability Oversight Council, 2014).
Many of the FSOC’s decisions are not actual independent decisions. They usually follow suit with the FSB. The FSB is the Financial Stability Board. One of the responsibilities of the FSOC is to designate certain companies as systemically important financial institutions or SIFIs. During last July the FSB designated Prudential, AID and MetLife as global SIFIs. Not shortly after the FSOC followed suit. One must wonder where they differ from each other. Or if the FSOC is simply a localized American FSB. This decision came from the fact that if a firm is a threat to the global economy, in turn it is a threat to the US economy as well. Yet instead of just coming out and saying that this decision was made as a result of the FSB’s decision they just released a Q and A in their release for that week. This Q and A basically goes against everything I said in this paragraph, going on to say that the two firms are similarly focused but that the FSOC is under no obligation to even consider a firm that the FSB identified for designated (The Treasury Evades the Truth on FCOS, 2014).
As with all new and old government founded groups my confidence in them could not be any lower. There have been economical disasters all through the history of our country, after each disaster, the government gets together and through all the red tape they create a way to fix it. Every time it is a full proof plan, no way to fail. Just seems too good to be true, and efficiency is not the federal government’s strong suit. As well at the government’s terrible track record for creating efficient protocols, they also answer to congress. Answering to congress is a joke, many organizations are supposed to answer to congress. The CIA answers to congress as well, but they only answer what they want to. There is two billion tax payer dollars a year going towards something that the CIA claims to not even be able to talk about, while this may be a matter of national security, it could also be a matter of the CIA being embarrassed over what they actually spent the money on, no one will know. Answering to congress is useless when congress has no authority over the organizations they create. They also claim that this council answers to the people as well, which is another lie. No one in federal government actually answers to the people, they answer to the people who represent the people who represent US citizens.