Navigating the Market: A comparison of spending on financial education and financial marketing Navigating the Market

"The Consumer Financial Protection Bureau (the CFPB) looked at the information

sources consumers are exposed to when they make financial decisions. Empowering

consumers to make the financial decisions that will help them meet their own life goals is a

critical part of the mission of the CFPB. To understand the wide range of information sources

consumers could be exposed to in making financial decisions, the CFPB commissioned a study

of the size and scope of the financial information field..."

Navigating the market

Who Regulates Whom? An Overview of U.S. Financial Supervision
"Federal financial regulation in the United States has evolved through a series of piecemeal responses to developments and crises in financial markets. This report provides an overview of current U.S. financial regulation: which agencies are responsible for which institutions and markets, and what kinds of authority they have. There are two traditional components to U.S. banking regulation: deposit insurance and adequate capital. Commercial banks accept a quid pro quo that was adopted in response to widespread bank failures during the 1930s. Through deposit insurance, the federal government provides a safety net for some banking operations and in return the banks that are exposed to depositor runs accept federal regulation of their operations, including the amount of risk they may incur. Since the 1860s, federal banking regulation has sought to prevent excessive risk taking by banks that
might seek to make extra profit by reducing their capital reserves—at the time called “wildcat” banks. There are five federal bank regulators, each supervising different (and often overlapping) sets of depository institutions.

Federal securities regulation is based on the principle of disclosure, rather than direct regulation. Firms that sell securities to the public must register with the Securities and Exchange Commission (SEC), but the agency has no authority to prevent excessive risk taking. SEC registration in no way implies that an investment is safe, only that the risks have been fully disclosed. The SEC also registers several classes of securities market participants and firms, but relies more on industry self-regulation than do the banking agencies. Derivatives trading is supervised by the Commodity Futures Trading Commission (CFTC), which oversees trading on the futures exchanges, which have self-regulatory responsibilities as well. There is also a large
over-the-counter (off-exchange) derivatives market that is largely unregulated..."

President Obama establishes Interagency Financial Fraud Enforcement Task Force
"Attorney General Eric Holder, Treasury Secretary Tim Geithner, Housing and Urban Development (HUD) Secretary Shaun Donovan, and Securities and Exchange Commission (SEC) Chairwoman Mary Schapiro today announced that President Barack Obama has established by Executive Order an interagency Financial Fraud Enforcement Task Force to strengthen efforts to combat financial crime. The Department of Justice will lead the task force and the Department of Treasury, HUD and the SEC will serve on the steering committee. The task force's leadership, along with representatives from a broad range of federal agencies, regulatory authorities and inspectors general, will work with state and local partners to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, address discrimination in the lending and financial markets and recover proceeds for victims..."

Modernizing the American Financial Regulatory System: Recommendations for Improving Oversight, Protecting Consumers, and Ensuring Stability.
"COP released its special report on regulatory reform today. The report discusses how regulation would have averted the crisis that we are in today, and how the implementation of smart regulation will help the United States can prevent another financial crisis and determine our economic success in the years to come.

Watch video of Chair Elizabeth Warren introducing this report below.

Also available in print format at:
332.660973 Un3u

CRS: Who Regulates Whom? An Overview of U.S. Financial Supervision
"Federal financial regulation in the United States has evolved through a series of piecemeal responses to developments and crises in the markets. This report provides an overview of current U.S. financial regulation: which agencies are responsible for which institutions and markets, and what kinds of authority they have."

Fact Sheet: Plan To Stabilize Financial System Is Limited In Size, Scope, And Duration
"Today, President Bush visited the United States Chamber of Commerce and discussed the actions that the Federal Government has taken in response to the financial crisis. The President explained that the government took swift action to protect the financial security of the American people. One important element, the equity purchase program, is designed with strong protections to ensure the government's involvement is limited in size, limited in scope, and limited in duration:

* The government's involvement is limited in size. The government's investment is capped for any individual firm that chooses to participate in this voluntary program, so that private investors retain control.
* The government's involvement is limited in scope. The government will not exercise control over any private firm. The shares owned by the government will have voting rights that can be used only to protect the taxpayer's investment – not to direct the firm's operations.
* The government's involvement is limited in duration. This program includes provisions to encourage banks to buy back their shares from the government when the markets stabilize and they can raise money from private investors..."

Emergency Economic Stabilization Act of 2008
Complete text of the Emergency Economic Stabilization Act of 2008

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

The Cost of Government Financial Interventions, Past and Present
"In response to ongoing financial turmoil that began in the subprime
mortgagebacked securities market, the federal government has intervened with
private corporations on a large scale and in an ad hoc manner three times from the beginning of 2008 through September 19, 2008. The firms affected were Bear Stearns, Fannie Mae and Freddie Mac, and AIG. Another large investment bank, Lehman Brothers, sought government intervention, but none was forthcoming; subsequently, the firm sought bankruptcy protection.

These interventions have prompted questions regarding the taxpayer costs and
the sources of funding. The sources of funding are relatively straightforward,
the Federal Reserve (Fed) and the U.S. Treasury. The costs, however, are difficult to quantify at this stage. In the most recent interventions (Fannie Mae and Freddie Mac, and AIG), all the lending that is possible under the interventions has yet
to occur. Also, in all the current cases, the government has received significant debt and equity considerations from the private firms. At this point, Fannie Mae, Freddie Mac, and AIG are essentially owned by the federal government. Depending
on the proceeds from the debt and equity considerations, the federal government
may very well end up seeing a positive fiscal contribution from the recent interventions, as was the case in some of the past interventions summarized in the tables at the end of this report."

The Cost of Government Financial Interventions, Past and Present
"In response to ongoing financial turmoil that began in the subprime mortgagebacked securities market, the federal government has intervened with private corporations on a large scale and in an ad hoc manner three times from the beginning of 2008 through September 19, 2008. The firms affected were Bear Stearns, Fannie Mae and Freddie Mac, and AIG. Another large investment bank, Lehman Brothers, sought government intervention, but none was forthcoming; subsequently, the firm sought bankruptcy protection. These interventions have prompted questions regarding the taxpayer costs and the sources of funding. The sources of funding are relatively straightforward, the Federal Reserve (Fed) and the U.S. Treasury. The costs, however, are difficult to quantify at this stage. In the most recent interventions (Fannie Mae and Freddie Mac, and AIG), all the lending that is possible under the interventions has yet to occur. Also, in all the current cases, the government has received significant debt and equity considerations from the private firms. At this point, Fannie Mae, Freddie Mac, and AIG are essentially owned by the federal government. Depending on the proceeds from the debt and equity considerations, the federal government may very well end up seeing a positive fiscal contribution from the recent interventions, as was the case in some of the past interventions summarized in the tables at the end of this report. The government may also suffer significant losses, as has also occurred in the past..."

Pelosi Statement on Legislation to Address Crisis in Financial Markets
"Speaker Pelosi issued the following statement today as Congress and the White House work to craft legislation to address the crisis in our financial markets:

Congress will respond to the financial markets crisis by taking action this week in a bipartisan manner that will protect the taxpayers’ interests. The Administration’s $700 billion proposal does not include the necessary safeguards. Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation.

We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome. Democrats will act responsibly to insulate Main Street from Wall Street.

As we proceed to deal with this crisis, this is clear recognition that the party is over for the Bush Administration’s anything goes, failed economic policies that have damaged our economy, undermined the middle class and further pointed out the need for a New Direction."

CBO: Policy Options for the Housing and Financial Markets
"The housing markets and financial markets are both in the midst of severe adjustments. House prices are falling rapidly, and expected to continue to decline. Mortgage foreclosures, particularly among subprime borrowers, have risen to record levels and are still increasing. The financial markets are having severe difficulties in adjusting to the loss of mortgage collateral."