It’s been seven years since the global financial system was brought to its knees. Since then the countries hardest hit, like the U.S. have taken steps to prevent another meltdown.
One of those steps is the 2010 Dodd-Frank act. It boosted regulation of capital markets by giving the government powers to break up a “too big too fail” before it threats the entire system. The law also invokes the Volcker rule, which bans banks from having proprietary trading operations for their own profit. That means they cannot own, invest or sponsor hedge and private equity funds.
The act also created the Consumer Financial Protection Bureau. One of the main tasks of the agency is to protect homeowners from mortgage fraud.
The reforms have forced U.S. to change the way they do business. For example, financial firms are giving smaller pay bonuses to staff. Banks’ bottom lines have also taken a hit, and that’s led to some even eliminating whole business units.
Now one of the industry’s pressing issues is staying competitive even with all the limitations. Some prominent analysts have called for the big banks, like Citigroup, to get smaller.
CCTV America interviewed Dan Alpert on the banking industry and whether it can return to pre-crisis levels. He’s managing partner with Westwood Capital.