The SEC and the Global Financial Crisis Research Paper

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SEC that features a short background on what the SEC is and when it was formed. It has interview questions and responses and a mini literature review to provide context from which to examine and recommend steps for the SEC to maintain control of major banks to avoid the Global Financial Crisis that happened in 2008.

The Great Depression and the turmoil that 1929 brought to the United States contributed to various changes within the financial market. Such effects are still experienced and felt today. The crises of that time caused public confidence to plunge key areas of the market with the only remedy being the passing of the Securities and Exchange Act in 1934 and the Securities Act in 1933. These two laws had three basic intentions that offered investors a more reliable way to collect information. The first was forcing public companies that offered capital in exchange for investment dollars to truthfully disclose the securities they sold and the risks involved for investors.

The second involved making individuals who traded and sold securities put investor interest first and treat them honestly and fairly. Through the passing of the Security Exchange Act, it helped create the Securities and exchange Commission or SEC that lad the framework for federal regulation of the securities market. By having transparency be a requirement, public companies because of the SEC, had to disclose more. This was especially true when it came to investment banking institutions, which was never a concern prior to the Great Crash.

Thanks to the SEC, there is protection concerning investor interest and management of brokers, securities firms, investors, advisers, and credit ratings agencies. The SEC is also responsible for the management of private regulatory institutions within the securities, as well as auditing fields and accounting. The SEC is meant to harmonize United States securities regulations with foreign, federal, and state authorities and issue new rules, while also amending existing ones. While the SEC is meant to increase transparency and financial disclosure and has done so for decades, in recent times however, it has not seen enforcement of such rules or requirements.

Problem Statement

The purpose of this qualitative study is to identify how effective the SEC is in relation to the handling of large banks. More importantly, what steps has the SEC taken to help regulate large banks since in the last few years, large banks have required federal bailouts in order to continue functioning leading to public concern over the ways large banks are treated by the SEC and their transparency rule. In effect, what measure has and will the SEC take to prevent the kind of problems seen during the passing Emergency Economic Stabilization Act of 2008 where banks were bailed out by the federal government in order to alleviate the subprime mortgage crisis.

Research Question

What steps has the SEC taken to handle more effectively large banks in the United States?

Theoretical Sensitivity

My qualifications show that I am able to perform this study. Being a student in my elected major provides me with access to professors and information that I can use to help determine which route and strategy is most effective when conducting research as well as gathering information from qualitative techniques. I am a good research tool because I check my sources for accuracy. I make sure to ask for assistance when needed from experts in my field. I also attempt to understand both the practical and theoretical perspective, enabling my growth and information sharing capabilities to show.

Parameters of the Study

I am going to organize my paper with the outline provided beginning with a one-page summary, a one-page introduction, and then continuing with problem statement, parameters of the study, and literature review. I want the literature review to give me the supplemental information I will need that will help me collect qualitative information in order to properly assess, examine, and interpret answers to my assumptions and research question. By constructing a model of how I organize the information, I can be able to get a better understanding of how things will be done and in which order. The interview will provide a guide from which to collect qualitative information from participants and the conclusion will draw from both the literature review and the answers from the interview.

Part Two- Research Design

There will be only one contact and that will be the chairman of the SEC. There will be ten questions all sent via email.

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This is a qualitative study using interview questions to collect information.

Collecting Documents

Aside from the literature review, the collecting documents are the responses I collected from an email sent to the chairman's office at the SEC. These responses make up the bulk of collecting information as well as what consisted of qualitative information collection.

Interview Questions

1. How has the restating of authority for the SEC to suspect application of Statement Number 157 of the Financial Standard Board helpful in avoiding another financial crisis as seen in 2008 with the large banks?

2. Has consulting with the Treasury and the Federal Reserve helped in conducting studies on mark-to-market accounting standards?

3. What steps has the SEC done to increase transparency in banks?

4. What are the current objectives of the SEC?

5. Has public view affected policy?

6. Has it deterred modification or review of policy?

7. Is there a concern over excessive risk-taking within the securities industry?

8. How do you feel about the salaries of bank executives before the 2008 financial crisis, where they made millions from short-term profits?

9. What steps are being taken to avoid bank executive doing the same thing in the future?

10. What are your thoughts on the Dodd-Frank Wall Street Reform as well as the Consumer Protection Act? Has that helped in any way?

Observations

When the questions were asked, which was done through email, there was not much response given in terms of specificity. There was a lot of vagueness indicating the person was not made aware of much of the inner workings within the SEC. Although I sought to speak to the chairman of the SEC with this email: - --, it seems the secretary may have answered instead of the chairman. Either way, the answers were short and non-descriptive.

Model

Organization of the data begins with a brief literature review that will provide some information concerning the SEC, the financial crisis of 2008, and the laws implemented to prevent conditions that causes the 2008 financial crisis related to the big banks. The other part will include the answers taken from the interview and providing the observations made from the interview including any interpretation of answers as well as how it may fit into the information found within the literature review.

Documents

The documents will be organized with themes. The first theme is the SEC before the financial crisis of 2008, during the financial crisis of 2008, and after the financial crisis of 2008.

Literature Review

Before the Financial Crisis of 2008

Many began pointing the finger when the Global Financial Crisis of 2008 began. One such person was the chairman of the SEC, Christopher Cox. The SEC's regulators were dormant when much of the events leading up to the crisis happened in the major banks. Some of which led to investor betrayal and deception with banks taking money from investors knowing how bad the market was. By adopting a 'hands-off' regulatory approach to public companies especially major banks, the SEC remained passive as problems grew and grew in the financial sector. They could have done more and could not blame their lack of 'reach' in controlling and regulating certain behaviors, especially from major banks since their capabilities grew since 2004. 'They point out that, while the SEC's direct regulatory authority over investment banks centers on the broker-dealer subsidiaries, the agency has expanded its influence over the holding companies in recent years' (Francis 2008).

During the Financial Crisis of 2008

During the financial crisis, the SEC took several actions in order to set up a framework to avoid the fallout that the large banks in the United States caused in not just the country, but throughout the world. One decision was the SEC entering into a trial mutual recognition agreement with Australia. 'Although the SEC also held preliminary mutual recognition discussions with regulators in Canada and the EU, ultimately Australia was the only country with which the United States concluded a mutual recognition agreement' (Ferran 2012, p. 229). This was because Australia was the least affected by the Global Financial Crisis and had in place protocols that enabled proper assessment of certain aspects of trade that the United States did not have. Along with that step, the United States set to enforce some actions through the SEC to make banks accountable for their mistakes. For example, SEC charged Citigroup's main U.S. broker-dealer subsidiary.....

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