After the financial crisis of 2008, many questioned the role of many of our nation’s largest banks in creating an unhealthy economic environment. There were certainly some serious and glaring issues with how some of these banks handled unsavory deals which exasperated the financial crisis, especially in regards to the housing market.
With these concerns, the Dodd-Frank Wall Street Reform and Consumer Protection Act as well as the global Basel regulations were introduced. Dodd-Frank has placed various regulations and changes on the financial sector, especially on banks and Wall Street firms. The major changes involve consolidating regulatory agencies, increasing transparency of all financial markets, new protections and reforms for consumers, a program for dealing with future crises if they occur, and improving international standards for credit agencies and accounting practices.
The Basel III regulation started in 2013. This regulation sets in place a global standard for bank capital requirements. It also changes and adds requirements for bank liquidity and bank leverage. Many people in finance have been worried about how the new regulations and changes will affect the ability of large banks to remain profitable and continue to deliver to shareholders. The changes have certainly been a challenge for some banks, which has been adding to fears of weaker bank performance.
According to Katie Little on CNBC, one analyst “sees the early stages of a recovery in banks’ capital markets businesses.” A primary reason behind this comeback is the fact that the uncertainty about the regulations and how banks are dealing with them is fading. Little put it directly: “The banks are making the changes to live in this post-Basel III, Dodd-Frank environment.”
This is yet another positive sign that many sectors in the US economy will have a better 2013. Many analysts are predicting stronger growth for the US economy as a whole. This may be the time to consider launching into new investment opportunities for your company or expanding or acquiring assets. Making the right decisions now will help your company excel in 2013.