Chapter III. Banking Market Regulation 286 results (showing 5 best matches)
- The FIRREA of 1989 and the FDIC Improvement Act of 1991 further strengthened the authority, corrective remedies, restitution for fraud, civil and criminal penalties available to bank regulators in protecting the safety and soundness of insured banks and other depository institutions, The Dodd-Frank Act of 2010 DFA established new supervision and controls over large and “systemically significant” financial institutions, including non-bank financial institutions, and created broader and more coordinated consumer financial protection mechanisms at the federal level.
- In addition to general banking market supervision, there are important special limitations placed on bank operations. Four major goals are reflected in these specific limitations: (i) Sound banking, reliable financial institutions, and reduced risk of irresponsibility; (ii) Competition, efficiency, and decentralization within financial and capital markets; (iii) Fairness for depositors, borrowers, and other customers of banks and financial institutions; and (iv) Adequate flows of credit to business, industry, housing and consumer markets.
- Finally, in 1999, however, Congress settled many aspects of a 20 year long boundary war among financial industries. The Gramm-Leach Financial Services Modernization Act of 1999 provided that Financial Holding Companies (FHC’s) could operate in banking, insurance, and securities markets. By 2003 there were 630 FHC’s in the U.S., which controlled 78 percent of BHC assets (supervised by the Federal Reserve Board). Banking activities in bank holding companies are regulated and supervised mainly by the Federal Reserve Board. Insurance activities are regulated largely by the state insurance departments or Commissioners. And securities activities are largely regulated by the SEC. Important ambiguities, mutual access to data, and the coordination of over-sight will have to be worked out in the coming years. The extent to which failures, fraud, money-laundering and other problems occur will have a great impact on this evolving area of financial holding company regulation. Unfortunately, the
- In the wake of the market collapse in September 2008 and the continuing financial crisis since then, there has been much political discussion about discouraging public belief and perception that the government will always intervene to “bail out” financial institutions perceived to be “too big to fail.” The Dodd-Frank Act in 2010 sought to blunt these perceptions by creating FDIC authority to supervise the resolution of failure of large, systemically significant financial institutions through a process of “orderly liquidation” of such institutions, distinct from the bankruptcy laws and parallel to FDIC receivership of banks and savings associations. This new authority is as yet untested, and it is not inconceivable that, in the face of another massive market failure in the future, the Congress might authorize emergency financial assistance to such institutions.
- International debate resumed on “architecture problems” for the IMF, multilateral development banks, international banking, exchange rates, capital and trade flows. Consensus was difficult on any stronger measures, since few wanted to cut back on global prosperity and trade flows. But a global euphoria toward freer trade and financing suffered a jarring setback. In this regard, the World Trade Organization (WTO) financial services agreement (FSA) of December, 1997, was more limited than many wanted in the early 1990’s. An outgrowth of the Uruguay Round GATT and WTO Agreement of 1994, the FSA was limited by strong reciprocity requirements (and prudential safeguards) imposed on emerging markets by the U.S., E.U., and Japan. Thus, most emerging markets were unwilling to open up their financial sectors to heavy participation or takeover by OECD nation banks and financial institutions; in response, the U.S., E.U., and Japan would not open their financial markets much to “third world” banks
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Chapter II. Money and Banking 182 results (showing 5 best matches)
- Most important, perhaps, for this text on banking and financial institutions are strains in financial balance sheets, greatly increased losses, and uncertain valuations for these institutions and their regulators. Government guarantees, insurance, and bailouts were needed for many countries. But information gaps and divergent estimates of the total cost to recapitalize the international banking system make this messy.
- Other provisions of the Banking Act of 1933 became more controversial: (i) Interest payments on demand deposits were outlawed to prevent “excessive” and cut-throat competition among banks that might weaken their financial strength. In the DIDMCA of 1980 this provision was finally rescinded for NOW accounts with any financial institution. (ii) Investment banking was separated from commercial banking, and some of the biggest commercial banks in New York divested their investment banking operations into separate companies. This provision, often described as the “Glass-Steagall Wall,” operated into the 1980’s, but was gradually relaxed, and largely eliminated in 1999. Some doubted the need for it today, especially since major brokerage and investment banking houses (like Merrill-Lynch) developed money market accounts and CMA’s rather like checking accounts, and compete more directly with banks. But this provision did help to maintain more detachment in commercial bank lending and trust...
- But then, gradually, new economic difficulties emerged in 2007–2008 from the banking sector. A growing problem were subprime home mortgages and securitized loans. Some large U.S. and European financial institutions disclosed big losses. Anxieties spread over credit default obligations. Risks multiplied about counterparty liabilities. “Toxic” securities and loan problems contaminated many balance sheets. Housing prices slumped in many areas. A surprising number of big U.S. commercial banks, investment banks, and other financial and insurance conglomerates (like Citigroup and AIG) were threatened. With unexpected speed a U.S. financial crisis morphed during 2008 into a broad international recession and slump. Bailouts of Bear Stearns, Citigroup and Merrill Lynch, and the September failure of Lehman Bros. (4th largest U.S. investment bank), sent shock waves thru world markets and eroded confidence. By mid-September 2008 it was evident that the U.S., much of Europe, and parts of Asia...
- The Panic of 1837, and subsequent depression until 1842, illustrate the weakness of financial institutions without disciplines to enforce sound banking, and without a lender of last resort to limit a chain reaction of bank failures. Looser banking, excessive loans and state banknote issue had helped to sustain a speculative land boom in the 1830’s. Liberal loans and investments from Europe added momentum. When Jackson’s administration, alarmed at speculation and worried about government deposits in selected state banks, cracked down and enforced specie payments for public lands (instead of state banknotes), the bubble burst. A panic followed, with a rapidly spreading financial crisis. By May, 1837, most of the country’s banks (now entirely state chartered) had suspended specie payments, and many failed. Foreign capital stopped flowing, many states defaulted on their debts for a while, and a few actually repudiated their obligations. Foreigners were distressed when the federal...
- Much of the banking, financial, and securities legislation of the New Deal era survives today. On the whole, it strengthened the financial system. But it should be understood as a series of emergency and other corrective measures designed to be helpful, rather than as a single master plan or ideological program. The dominant theme was pragmatism, and a feeling that government should act forcefully to restore prosperity, if possible, and to prevent another depression. (These “reforms” are summarized in Chapter I, and set forth in more detail with respect to money and banking in Chapters II and III, with respect to savings institutions in Chapter IV, and securities markets in Chapter V infra.)
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Chapter VIII. Controversies and Prospects 61 results (showing 5 best matches)
- Banking and financial institutions law is an evolution of compromises. The development of money and banking law, banking market regulation, thrift institutions, securities markets, insurance companies, pensions and social security funding was set forth in previous chapters. But a number of important issues are controversial now, and being dealt with by the Executive Branch, Congress, and the regulatory agencies. While outcomes cannot be predicted with certainty, the issues and arguments can be summarized. This provides considerable insight into the challenges for banking and financial market regulation in the coming years.
- Until recently each major field in the spectrum of U.S. financial institutions, commercial banking, thrift associations (MSB’s, S & L’s, and credit unions), securities marketing firms, and insurance companies, was almost entirely specialized to itself. There was little diversification or cross-ownership between these financial industries, and not much ownership of significant financial enterprise (in any of these channels) by outside industrial companies. Each financial sector was supervised mainly by its own regulatory agency or agencies, responsive and friendly to industry needs, along with more general public and consumer interests. Within their respective channels, banks, thrifts, securities firms, and insurance companies performed their intermediation roles, served depositors and customers, and grew within the latitude allowed for their industry. (See Chart VIII–1 for Traditional Market Participation Among Financial Institutions.) Chartering policies, fiduciary responsibilities...
- Many observers viewed this trend of diversification as moving toward nationwide financial conglomerates. Early leaders in this structural transformation were the largest U.S. commercial banks, Citicorp, Chase, and Bank of America, Merrill Lynch (strongest in the securities industry), Sears’-Allstate-Dean Witter-Coldwell Banker (an early nationwide-retailing-insurance-securities-real estate brokerage conglomerate), Shearson-American Express (brokerage, credit cards, and travel services), and Prudential-Bache (a major insurance securities combination). A continuation of this merger trend and diversification movement, if unrestricted, could produce, within a number of years, a restructuring of U.S. financial markets. (See Chart VIII–2, Potential Restructuring of Market Participation among Financial Institutions.) What had been separate financial industries, broken down into loose oligopolies, with many small and local financial institutions, could essentially become a much more...
- Formulating goals for monetary, banking, and financial institutions policy is helpful, and it reveals the conflicting interests at stake. These arrangements should promote healthy economic growth, ample savings and productive investment, full employment and low inflation. Interest rates and financial service charges should be adequate for these purposes, but not excessive or unreasonably discriminatory. Competition among financial institutions is essential, with relatively easy entry, but we should insist that participants be responsible and properly capitalized. Large multinational institutions are desirable for many purposes, yet we should avoid excessive concentration or dominance by these firms. Institutions that are “too big to fail” pose awkward “moral hazard” problems. Decentralized enterprise and healthy local institutions are important in a federal democracy, and their vitality should be encouraged.
- Obviously, problems arise in implementing these general goals. Even this much is controversial to some participants in financial markets, and for other nations (particularly debtor countries wanting generous renewal of credits and foreign assistance). Most banking and financial trade associations have more specific agendas of gains, relief, and “turf protection” against each other. There are real, important and unavoidable conflicts of interest in framing monetary, banking, and financial institutions policy.
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Chapter IV. Thrift Institutions 123 results (showing 5 best matches)
- from commercial banks, savings banks, savings and loan associations, mutual funds, and insurance companies. Credit unions were set up mainly to take smaller, passive deposit accounts, and to make relatively small consumer loans to members. Bigger, higher yield deposit and investment accounts would go elsewhere, if the other financial institutions bid for them effectively. Meanwhile, more of the home mortgage finance, consumer durables, and other consumer lending probably will continue with other financial intermediaries. But credit unions have become a respectable, extensive, and useful form of competitive discipline for the financial institutions industries. More of the older mutual tradition survives among credit unions, in fact, than in most savings banks or savings and loan associations. This can be helpful to credit unions in retaining a substantial role within the thrift sector in a period of challenge for financial institutions generally.
- Savings banks, savings and loan associations, credit unions, and similar entities—referred to collectively by the informal term “thrift institutions”—originally were created to meet needs for saving, credit and loans of people whose resources and income were modest. Commercial banks, merchants, money lenders, and pawn shops often did not serve this demand for loans or savings as well, or with interest rates as favorable, with respect to poorer individuals and families. During the last two centuries, thrift institutions were gradually developed, therefore, by social reformers, philanthropic benefactors, religious and fraternal organizations, trade unions, employers, and thrift entrepreneurs (in most countries of the world) as a collateral type of banking or financial intermediation. With expanded prosperity and broader affluence, these thrift institutions grew more sizable, and many became more like banks in their offerings of deposit accounts and check-writing services, and sought a...
- More recently, however, much of the thrift industry recovered their financial health. Generally the “problem” institutions had either failed or recovered by the mid-1990’s. But the consolidation movement that hit the U.S. banking industry since the mid-1980’s continued throughout the full range of depository institutions. Commercial banks declined in numbers from 14,285 to 7,338 between 1985–2008 while bank assets grew from $2,350 billion to $11,806 billion in these 24 years. Savings banks and S & L’s declined from 3,905 to 1,265 between 1985–2008, but thrift assets (S & L’s, savings banks, and credit unions) grew modestly from $1,414 billion in 1985 to $2,591 billion in 2008. Substantial numbers of thrift institutions, and their assets, had been acquired by commercial banks in these years. Also significant was a disparity in FDIC insurance premium assessments for BIF institutions—as compared to SAIF insured S & L’s and savings banks, prior to the merger of the BIF and SAIF into the...
- Savings and loan institutions prospered in the period 1900–1929. The number of S & L’s grew from 5,356 to 12,342, and their assets mushroomed from $932 million to $8.7 billion. This compares with a slight decline in the number of MSB’s, i.e., from 626 to 598, and a slower growth of $2.3 billion to $9.9 billion in MSB assets. Meanwhile, commercial banks trebled in number from 10,800 to 30,000 between 1900–21, although shrinking to 25,000 in 1929. Commercial bank assets grew from $9 billion in 1900 to $62 billion in 1929. As a whole, thrifts roughly maintained their share of financial institution assets as compared to commercial banks, but S & L’s grew more rapidly than MSB’s, and approached the MSB’s in total assets—even though the average S & L’s $700,000 assets was still much smaller than the average MSB’s $15 million assets.
- This support of housing markets became an important dimension of national financial and banking policy. Money and credit markets were significantly affected, and it became customary for fiscal, monetary and banking policies to be worked out consciously in the light of housing finance and the various institutions involved. The U.S. House and Senate Banking committees included these matters as part of their detailed work and jurisdiction, and regular lobbying shaped legislative and regulatory policies, budgets and credit support in their favor.
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Chapter I. Evolution of Banking and Financial Institutions Law 61 results (showing 5 best matches)
- Two major themes dominate recent concerns about the regulation of banking and financial institutions. The first is anti-inflation and macro-economic policy, and the second involves the potential for restructuring financial markets through cost savings, service improvements, new roles resulting from electronic funds transfer, and changing boundaries between financial institutions.
- Added complications come through cost reduction, service improvement and new competitive forces associated with electronic funds transfer, securitization, mobile banking, and other innovations. Traditional boundaries and roles in financial markets eroded substantially. When inflation rates increased, strains of disintermediation affected some financial institutions. Legal restrictions often added to these difficulties, and slowed market adjustments. Thus, pressures for structural change combined with inflation to challenge some of the accumulated law and regulation affecting banks and savings institutions. Then anti-inflation policy, emphasizing higher interest rates (especially between 1979–82, but continuing somewhat into the 1980s—due to budget deficits), brought deflation pressures. Subsequent loan losses developed in many areas (developing country debts, agricultural loans, highly leveraged corporations, and commercial real estate lending by thrifts and banks). Bank and thrift...
- This book mainly emphasizes the law and policies affecting banking and financial institutions in the United States of America. But we must never forget that money, finance and commerce are increasingly international in character. Financial markets, transactions, and credit-borrowing flows are world-wide. And the entire network is experiencing an onslaught of technical change. Electronic communications, funds transfer, coding, access, cards, telephone, and computerized linkages are transforming finance and accounting. These changes, along with conflicting pressures from industry groups, moderate and conservative, together with liberals and socialist reformers, in various countries, have made the law of banking and financial institutions an exciting, if somewhat unsettled field of activity. Our purpose is to summarize the American legal arrangements in detail, and put them in the context of powerful international forces and technological trends.
- Private banking enlarged the financial potential of city states, republics, kingdoms, and empires through much of history. Financial activity might flourish with military success or expanding trade and prosperity. But risks were inherent in private family (or partnership) banking. Depositors received no more assurance than private fortunes and reputation could guarantee, and banker’s notes in circulation might fluctuate in value and suffer significant discounting. To achieve stronger, more reliable banking activity, many countries in the Mercantilist era created national banks, such as the Bank of Amsterdam, Banque Royal, Bank of England, Bank of Sweden, Banque de France, Bank of Prussia (later the Reichsbank), along with the first and second Bank of the United States (the latter being the subject of the seminal Supreme Court decision in , 17 U.S. (4 Wheat.) 316 (1819), upholding the authority of the federal government to create a central bank). These institutions were early “central
- Modern industrial societies need money, banking, and financial institutions to trade and prosper. Money serves as our medium of exchange and standard of value. Money and financial deposits are convenient, liquid stores of value for individuals, families, businesses, and other organizations. Banks and financial institutions collect money and deposits from all elements of society, and invest these funds in loans, securities and various other productive assets. Every healthy economic system requires that money, banks, and financing intermediaries provide this service efficiently and reliably. Production, saving, investment, and efficient industrial development are facilitated thereby. Such work is vital for the transactions flow of each nation and the world economy.
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Chapter VI. Insurance Regulation 130 results (showing 5 best matches)
- Nonetheless, recent competitive trends and inflationary distortions have affected insurance companies, along with other financial institutions. For these reasons, insurance company product offerings, their attractiveness to the public, and the regulation of insurance is better understood in conjunction with banking, thrifts, securities markets, and government policies affecting capital and financial markets generally. Meanwhile, the financial crises of 2007–2009 brought greatly increased losses in the Financial Sector (including quasi-insurance products, many toxic assets, and derivative securities). These problems justify stronger surveillance, supervision, and emergency government support, in at least parts of the insurance industry, along with commercial banking, investment banking, and securities firms.
- In the life insurance area other financial institutions wanted to enter which could narrow sales margins and commissions somewhat further. Until 15 years ago only some MSB’s and credit unions offered life insurance policies. But now many thrifts and commercial banks sell annuities and/or some life insurance, and more competition results. Yet, it should be emphasized, reasonable life insurance reserves have to be maintained, in any event, by new competitors. Larger banks and financial institutions will probably find it easier, therefore, simply to make acquisitions of life insurance companies, and perhaps expand their sales (and absorb their profits). This is what Gramm-Leach “reforms” achieved in allowing financial service conglomerates in 1999.
- A “turf war” over boundaries and diversification among commercial banks and thrift institutions raged for 15 years since the early 1980’s. When failures became widespread among banks and thrifts in the late 1980’s, most states relaxed their restrictions on interstate banking. Later big banks won further branching relaxation under the Riegle-Neal Act in 1994 (see Chapters III and IV).
- More dramatic responses at the federal level need to be explored, but these have been slow to materialize. The Dodd-Frank Act established the Federal Insurance Office (FIO) within the Department of the Treasury and vested FIO with the authority to monitor all aspects of the insurance sector, monitor the extent to which traditionally underserved communities and consumers have access to affordable non-health insurance products, and to represent the United States on prudential aspects of international insurance matters, including at the International Association of Insurance Supervisors. In addition, FIO serves as an advisory member of the FSOC, which has the authority under the act to designate large insurance companies, among other non-banking financial institutions, as systemically significant financial institutions subject to Federal Reserve supervision. (No such designations have occurred as of this writing.) The FIO also has the authority to recommend and approve the resolution of a
- Meanwhile, beginning with Garn bill proposals in 1983–84 to allow interstate financial conglomerates (including insurance), elements of the banking industry sought insurance underwriting and/or marketing powers. Although insurance companies and independent insurance agents resisted this effort, and the U.S. Senate rejected bank insurance powers by a lop-sided majority in 1984, insurance authority remained a goal for some banking interests. Gradually, a few states began to allow banks to sell or underwrite insurance. Comparable legislation was offered in other states, along with recurrent bills in Congress to allow financial service holding companies. But few experts believed any major integration between banking and insurance could come quickly.
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Chapter V. Securities Market Regulation 114 results (showing 5 best matches)
- In contrast to the banking and thrift regulatory systems, where federal (and state) regulatory authorities impose trusteelike accountability over such institutions and their managers, with strong efforts to preserve and regulate growth of the “money supply”, the SEC’s supervision of securities markets is much more limited. So long as adequate disclosure is assured, deceptive practices and market manipulation minimized, the securities regulation system assumes investors should take their own risks. Thus, investments, for the most part, are considered to be more risky, hopefully more profitable, and not deserving of government safeguards to the same degree as demand or other liquid deposits in financial institutions (like banks, MSB’s, S & L’s or credit unions). Thus, the major theme of securities regulation is registration and disclosure enforced by SEC and private remedies. The firms participating in the securities business, exchanges, underwriters, dealers, brokers, investment...
- By 2012, the IOSCO Secretary General reported that the organization saw a profound reorientation in process, from bank-centric financial models in many countries towards more market-based financing in the future. With capital requirements increasing and a new emphasis on global systemically important financial institutions), while bank leverage was declining and public financing tightened, and private pension provision set to increase dramatically, financing gaps are becoming critical and will have to be filled by market instruments of one form or another. Thus, strong local securities market development is essential for long term economic prosperity, making the role of securities regulators and the role of IOSCO even more important for the future.
- Financial and securities markets have become increasingly “internationalized” over the last 50 years. Broader prosperity followed. But bigger risks of booms, disruptions, inflations, and slumps are complications. Accordingly, national governments, central banks, securities market regulators, insurance supervisors, and legislative bodies became more active in “Surveillance, Supervision, and Support.” And international institutions like the IMF, BIS, IAIS, IOSCO, and World Bank must play stronger roles, too.
- Securities markets and financial intermediaries help to mobilize the savings, loanable funds, and resources available for investment in society. These resources are gathered by appropriate incentives, interest payable, and profits shared (or some kind of taxation), through financial intermediaries, securities markets, and government operations. Although some saving and investment occurs internally within households, business enterprises, other institutions, and government, the larger portion of savings in a complex industrial society flows through financial intermediaries and the securities markets. (See Chart V–1.) In this way, specialized information, talent, and risk pooling makes safer, more productive allocations for many investments than would otherwise be feasible within households (or other direct resource holding organizations). The allocations within each alternative channel for intermediation and investment should be optimized by free market price competition. The...
- A typical portfolio for money market mutual funds would comprise CD’s from U.S. and foreign banks, high-grade commercial paper (short-term) from corporations, and/or short-term government securities. Average maturity of this portfolio for MMMF’s would be 30–40 days. Such a portfolio is reasonably secure, reliable, and dividend yields float with portfolio yields (minus expenses). There is little danger of such a fund’s liquidity or solvency failure—unless there were a major crisis in the domestic or world economy. Normal expenses for such funds average less than 1 percent on assets. This is a thin margin for operating expenses among financial institutions.
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Preface 9 results (showing 5 best matches)
- Sadly, however, lax surveillance reappeared in U.S. mortgage finance, global securitization, and off-balance sheet activities. This brought an even bigger wave of bank losses in 2008–2009. Another round of bank failures in the U.S. and Europe combined with several trillion dollars of contaminated assets. Awkward uncertainties hit the largest U.S. and European banking and securities firms. Many of the biggest institutions needed multi-billion dollar bailouts, guarantees, and/or loan support. Over-leveraging, over-confidence, and gaps in supervision were to blame. Once again, regulatory agencies and financial markets are strained. But lessons from the Great Depression, the 1970’s, 1980’s, and the 1990’s are helpful in the current crisis.
- This book is intended for lawyers, law students, economists, bankers, and business people seeking to understand recent developments in banking and financial institutions law and policy.
- Major changes have occurred. Broader rivalry developed over the last generation among banks, thrift institutions, securities firms, mutual funds, insurance companies, pension funds, various retirement and investment accounts. Considerable deregulation was achieved; yet the next steps remain controversial. Unfortunately, a costly wave of U.S. bank and thrift failures came in the late 1980’s–early 1990’s. This led to tougher laws in 1989 and 1991, and substantial bailout and restructuring efforts, especially for S & L’s and savings banks. But, as economic conditions stabilized and bank margins improved, capital was replenished for most U.S. institutions since the early 1990’s. Renewed confidence with sound oversight seemed to be re-established.
- An extensive body of literature and law exists in each area summarized by this book. But hardly any legal writing properly integrates these developments for banking and financial intermediaries as a whole. This book meets that need, and has been heavily revised for recent developments.
- This book explains the economic, historical, and legal background for banking and financial intermediaries. Law and policy-makers tried to compromise conflicting interests, with a view toward improved competition and overall performance.
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Chapter VII. Pension Funds, Retirement Accounts and Social Security 79 results (showing 5 best matches)
- Generally speaking, ERISA provides that pension fund managers, trustees, or officials with control over such funds must be bonded. Because such people are all liable to participants. beneficiaries, and their funds for breach of fiduciary duty, and may involve their company or organization in expensive liabilities, this would be normal prudence in limiting the risk of such loss. Specific exemptions, however, apply to bonding for insurance company, bank, and trust company fiduciaries, but their executives are often bonded anyway, and these financial institutions would be liable themselves for any breach of fiduciary responsibilities.
- The economic significance of self-employed, individual retirement accounts, and supplementary retirement options is substantial. These accounts broaden the access to retirement savings among financial intermediaries, and allow more competition for these funds. Banks, MSB’s, savings and loans, insurance companies, mutual funds, and money market funds compete for these funds, along with many established pension plans (through SRA’s and related options), and securities brokerage firms offer “self-directed” Keogh investment accounts for stocks, bonds and other securities. More savings may result from Keogh, IRA, SRA and related accounts, although funds in this category may have less liquidity, and are often subject to financial institution management and service fees. The widening of access to these tax-sheltered savings and investments may be influential politically. This may prove to be a popular, broadly desired tax concession for many families. Conceivably, the taste for “... ...and...
- The Pension Benefit Guaranty Corporation (PBGC), while comparable to the FDIC, NCUSIF, and SIPC as a financial institution insurance agency, is weaker than most of these other agencies. It does not have as active a monitoring role for financial soundness of pensions, partly because the IRS has some of this financial responsibility. It does not have comparable corrective order authority, and limitations with respect to the 30 percent lien on net worth constrain its use as corrective leverage. Nor does the PBGC guarantee all pension benefits; it merely insures basic benefits up to the monthly limits, and covers only “defined benefit” plans, not “defined contribution” plans.
- Pension funds, retirement accounts, and social security benefits are an increasingly important part of the economy. From relatively modest beginnings with private pensions before the social security system was established in 1935, the benefits paid under these arrangements have grown, as a share of U.S. GNP, from .6 percent in 1940 to 3.9 percent in 1960, reached 8.2 percent in 1980, and could be 9 or 10 percent now. (See Table VII–1.) Reserve assets held for pensions and retirement accounts are growing substantially, and pension funds (in one form or another) are major financial intermediaries. In 2007 private, state and local government pension funds held about $17,600 billion assets. If social security were funded comprehensively, its current benefits might need another $10,000 billion assets (but social security is financed mainly with current payroll taxes, and only limited trust fund reserves). Thus, the collection of funds for pensions, retirement, and social security are...
- There are limits, of course, to the social security tax burden that is bearable. Many believe social security taxes have reached (or exceeded) this limit already, and that any further retirement income gains must come from increased personal saving and investment (mainly from more prosperous citizens). Because of constraints upon social security payroll taxes, some liberals believe general tax revenues should be used to help support social security (and related social insurance and health care). But business interests, the insurance industry, most financial institutions, and, thus far, the majority of Congress have resisted this idea. They argue that social security disbursements cannot be properly disciplined (and limited) unless they are tied to some self-contained payroll-tax contribution mechanism like the present system. At issue is the basic level and distribution of pension and retirement benefits that society believes it can afford.
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Outline 87 results (showing 5 best matches)
Title Page 5 results
Copyright Page 6 results (showing 5 best matches)
- Nutshell Series, In a Nutshell
- The publisher is not engaged in rendering legal or other professional advice, and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional.
- West, West Academic Publishing, and West Academic are trademarks of West Publishing Corporation, used under license.
- Printed in the United States of America
- © West, a Thomson business, 2001, 2005
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Index 159 results (showing 5 best matches)
- Financial Institutions Reform Recovery, and Enforcement ACT (FIRREA), 27, 84–85, 145, 174, 178, 193, 276, 305, 314–317, 510
- Financial Institutions Regulatory and Rate Control Act (FIRA), 174, 190, 208–209
- Federal Financial Institutions Examination Council, 131
- Federal Financial Institutions Examination Council, 131
- Uniform Financial Institutions Rating System (“CAMELS”), 168–170
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List of Tables and Charts 15 results (showing 5 best matches)
- Table IV–1. Development of U.S. Thrift Institutions: Mutual Savings Banks, Savings & Loan Associations, and Credit Unions, 1816–2012
- Chart VIII–1. Traditional Market Participation Among Financial Institutions
- Chart VIII–2. Potential Restructuring of Market Participation Among Financial Institutions
- Chart III–2. Balance Sheets for Banking Institutions
- Chart III–3. Income Statements (Cash Flow Accounts) for Banking Institutions
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- Publication Date: June 21st, 2014
- ISBN: 9780314288509
- Subject: Banking/Financial Institutions
- Series: Nutshells
- Type: Overviews
- Description: Authoritative coverage provides a foundation for understanding recent developments in banking and financial institutions. This Nutshell title covers subjects such as increased competition, deregulation, bank and thrift failures, large-scale bailout, and restructuring efforts. Unresolved challenges include budget stimulus, deficits, and renewed supervision by regulators.