New Financial Regulations and the Danger of a New Catastrophe

Posted: August 12th, 2013

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New Financial Regulations and the Danger of a New Catastrophe

The 2008 financial crisis was one of the lowest moments in the financial history of the US. It represented a period in American history where the economic decline was so adverse, it led to a worldwide recession. It was a period characterized by a downward plunge in securities value, which in turn, affected banks worldwide. The crisis triggered a worldwide advocacy for regulations in financial policy. This meant that there was a need not only to correct the crisis but also to prevent or reduce the effects of any similar future threat to the financial economy.

There are however two concerns. The first concern is whether new regulations in the financial sector can prevent such a disastrous occurrence, and, second, whether the stakeholders can evade the new regulations thus leading to a similar catastrophe. Bureaucracies within the US government and the inefficiency of government agencies may affect the implementation of financial regulations. New financial regulations must be implemented to check adverse or suspicious activity in the financial and securities markets. These may work, but their success depends entirely on the federal agencies and their commitment to ensure that financiers do not evade policy.

A regulatory framework by the government will therefore serve as a panacea for current financial troubles as well as also check the unhealthy actions of financiers. Its implementation will no doubt be a huge step towards curbing malpractice in the financial sector and the securities market. This success however, will be dependent on the commitment of the various government agencies and the effectiveness of the federal agencies entrusted with its enactment. It should involve watertight procedures and utmost vigilance to frustrate all evasive attempts by financiers. Financial regulations can work, but only with the necessary support from the concerned arms of government.