Help Me With Sign Arkansas Banking Living Will

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all right let's move on now that i piqued your interest let's move on to regulation government regulation of financial institutions okay we've got a lot to cover we're going to try to catch up i will tell you that starting a chapter i think it's chapter five um we'll be doing the videos are already made and so we'll be able to catch up okay so we'll get back on schedule all right so so this chapter has to do with the regulatory environment the government's ooh how did that happen around the world all right have created for financial service firms so financial service firms are highly regulated okay why are they highly regulated why does government pay so much attention to these firms first because depository institutions and non-depository institutions like mutual funds investments pension funds they hold the savings of the public they're safeguarding the public's money man other than love and life the third most important thing is money for some people it's the most important thing right so you got to make sure you do the best job you can okay that's another thing against me anytime you a politician says we have to ensure this will never happen again don't that think about how ridiculous that is they say it all the time we must make sure this never happens really are you god how will you make sure it never happens again okay you can't you can learn from the past you can take steps to minimize but you can't make sure something doesn't happen yet okay now you can only kill somebody once okay so i guess you can say i'll make sure that he's dead and i'll make sure that we don't kill him again but other than that all right so two bring stability to the financial system if you want a healthy economy you've got to have a stable financial system it's critical okay and when you look around the world at all the economic problems that exist i talk to the walt students all the time it's heartbreaking what is going on in their countries it's all corrupt that there's nothing stable and so when joe blight says we're going to open the border and give the benefits what happens well thousands of people start walking you know they want to come here because they want stability they're not greedy people they're not bad people they're just like you and me they want stability okay and then to prevent abuse of financial services customers and that happens all the time man human nature whoa you don't believe in satan just look at how people treat each other all right they even get on facebook and say stuff personally all right financial institutions are subject to some of the heaviest most comprehensive rules applied to any industry okay all right what is the downside regulation there's upside regulation all these things this is what the government's trying to do positive things let's not look at the regulators as as our adversaries they can be sometimes but they're needed okay so they can be burdensome to employees and customers if regulations can make it difficult to do business regulations cost a lot of money firms have to employ a lot of people to keep them in line with the regulations and then again as in point number one burdensome it can really hold down innovation and efficiency because it raises the cost and so a lot of things might not be tried because the cost is so high you won't make a return on it so anything that's that slows down innovation and efficiency is potentially damaging to our quality of life so it's a balance between regulating and not regulating and as i tell our management class every time we've had a financial crisis it has been caused in part by bad government policy sometimes it's intentional where the people really want to do some bad things okay like say aoc but sometimes people have really good intentions but what they the idea is to think that they try to work out all right so again why are banks closely regulated because of savings okay banks have the power to create money that's right they create money by making loans available and by making investments banks are sources of credit and money so banks have a critical role in facilitating and enabling commerce really important have a good bank okay you know there's a saying banks only loan money to people who don't need it if i were a banker and someone said that to me i would be devastated because that is not the role of banking banking banks have to take some risk it's their job to take some risks with the ones that they make all right so right from the get-go banks have been involved with government at all levels right so unfortunately when you think government you also think money they go in government and money all right so in the u.s banks are regulated through a dual banking system really it's like a quadruple banking system as you'll see all right federal and state authorities have regulatory powers banking is a complicated business in terms of regulations because there are so many people that are watching so many different groups all right and there are multiple agencies at the federal and at the state level that are watching you it's like it's it's a never-ending series of examinations different groups coming in and checking up on okay somebody caught up with me if if you if i ever get ahead of you too far ahead just raise your hand or say hey doctor he slow down all right all right now interestingly this is not a new idea some firms actually seek out regulation some companies want regulation why well because they're already in business once they're in business then they want to make it tougher for other companies to compete with them and i tell you what that's totalitarianism and it's terrible it's pure greed and we need to be on the lookout for it how many of you guys have read the road to surfing you read the road to search them it's an important book erode the circle if you didn't know better you would have thought that somebody wrote it in the last month or two it was written in like 1940 41 something like that and it's taught it talks about how the us is creeping toward totalitarianism and how reminiscent it is of what happened to germany after world war one and one thing that this economist frederick hayek talks about is the need to promote competition socialists want collectivism the state the state the state capitalists people who who value freedom and liberty they want competition you can't have both it's one or the other the idea of having both doesn't work so some companies in a capitalist economy still try this who's seen the aviator with leonardo dicaprio you haven't seen that was it david did you like it oh man leonardo is he not a good actor i mean that dude he's awesome i ain't talking about the wolf of wall street get off of that that was terrible i watched five minutes and turned it off but in the aviator alec baldwin who used to do donald trump on saturday night live until he's had all kinds of problems of his own was the president of pan am and he was able to convince congress to limit the number of airlines that could fly internationally in the united from the united states out to one and said it was good for consumers whereas leonardo dicaprio who was howard hughes wanted to he had a he had a rival airline and he wanted it to fly internationally he wanted to compete with pan am and eventually they opened it up they deregulated but there was pan am in the u.s and they were parading around saying it's good for the u.s consumer that's a false profit don't fall for that don't fall for that all right regulations often block entry into the regulated industry all right and a well-known regulated industry that we have uh jack's uncle is he your uncle johnny's family owned a liquor store in charleston if you get a liquor store permit and i said jack doesn't go to that liquor store don't be looking at him like that but you have to get a permit and you all remember a couple years ago when cersei finally started uh allowing the restaurants and o harding jumped in and all the churches got all bunched up and said you can't do that what we want is for people to drive to cabot and drink and then get on the road and drop back to cersei that's what we really want and so that you know okay so um but the point is that when the government can limit who's doing business it's an oligopoly or a monopoly that's what you have man those permits are worth something all right so regulations can increase customer confidence they make people feel more comfortable that everything is on the up and up everything is safe and in a democracy and in capitalism and we go over this in in manpin i asked the students is the u.s economy a house of bricks or a house of straw you remember that um you remember that cartoon or whatever like that comic or that fairy tale and everybody says oh the us it's a hat the economy is a house of bricks it's not it's a house of straw people okay and what keeps it from folding what's it based all on confidence it's all based on confidence if we lose confidence everything falls apart okay so it's important to have confidence all right so sometimes customers are out there and in some cases if man it's really needed to have these regulations absolutely again human nature all right so i will tell you this i've seen this firsthand at the state level and at the federal level that the firms that are regulated argue like crazy with the regulators and banking is way up there and banks contribute tons of money to the politicians okay tons of money to try to influence regulation and it's interesting because who knows in industry the best people who are in the industry okay and so you've got if you're if you're in congress and you're making regulations rules and regulations who are you going to talk to about regulating the industry well you better talk to people in the industry because they they know it better but i'm telling you what they're going to do when you talk to us they're going to resist resist resist okay so it's a struggle it's not easy to rate it all right financial services every firm out there tries to find ways around the rules and you know that's again a little bit of a repeat how many times we have to say regulations raise costs and reduce innovation efficiency and they use that argument a lot so back in the mid 80s when they started to dismantle some of the major banking regulations that were put in place after the the stock market crashed in 29 the their whole argument was well we can't compete with japan back y'all wouldn't know this you know who are who's our biggest threat today for competition well it's china okay and china feels out about the u.s you know it's just a natural thing they're a big country we're a big country well back in the 80s it china was nowhere to be seen because it was still communist and they were they were living in caves frankly it was very primitive back then now you go they have a few most beautiful cities on the planet if you see the pictures of their major cities it's just breathtaking to see what's happening but what we were worried about when i was your age was japan oh japan japan was buying us real estate they bought rockefeller center where the big christmas tree is we were scared to death we thought japan was going to take over the world right and so the banks were saying well the japanese banks can do this and this and this and these old regulations from 60 years ago were keeping us from from doing things they talked the politicians into dismantling the regulations and ultimately that contributed to what happened in 2008-2009 it was a slow process when we got there you'll see some of the rules and regulations in just a minute all right so who controls uh banks who regulates banks well the controller of the currency and they they regulate national banks banks that go to the federal government to get a chart because they want to do interstate bank okay 1450 banks roughly regulated by the comptroller in the first okay that's a big the occ obviously the comptroller of the currency all right then the federal reserve one of the things they do is they regulate banks and they regulate state chartered banks and they also regulate very large bank holding companies there are about 840 banks that the federal reserve regulates okay and again there's some crossover where you've got you're regulated by two or three of these bodies all right here's another the fdic 4500 banks all banks that want to have their deposits insured are regulated by the fdic remember the fdic insures about 95 of all insured deposits three or four other companies they don't matter okay all right and then state banking commissions and two years ago i had the assistant bank commissioner arkansas she's now the banking commissioner she's been promoted she's now the bank commissioner arkansas come in and talk to us okay so about 5300 banks are state chartered in about 1500 banks are national charter okay and so these when you start talking regulation of banks every time you look at a bank you have to know that they're dealing with one or more of these bodies and usually at least two at least two you know either the state either the state board and the fdic or the comptroller in the currency in the fdic so when you start talking about rules that need to be changed like what happened in the banking crisis in the financial crisis back in 2009-2010 the key players were the directors of these organizations okay along with the treasury director and paulson all right then if you run a brokerage firm okay where you're buying and selling securities for people you are also regulated by the securities and exchange commission you learn about the sec and the investments class okay securities act 1939 all right then if you're involved in in commodities trading energy and chemicals and gold and agriculture then the commodities future trading commission gets involved too that's not so big but a lot a lot of the banks a lot of the money center banks do offer these commodities trading operations all right and then the department of justice is involved when banks will emerge okay particularly if a merger is a will significantly impact competition in an area then the department of justice is going to jump in and look at it and say no this is going to really limit competition we're not going to allow it okay and so this is the doj is really big here all right okay so now let's start looking at some of the laws all right so the national currency and bank act bank acts of 1863 1864 back in civil war times okay that's a long time ago all right first major major federal government laws okay so this is when bank legislation really started hitting okay and they weren't they were getting organized insurance actually got regulated even earlier okay but i'm sure banking had was regulated in england and in europe for a couple hundred years before they started regulating in the u.s so you want to you want to open up a bank you had to get a charter okay and so they created a department inside the u.s treasury department called the occ and you had to apply to the occ to open up a bank okay so the occ is the oldest regulator so what are some of the things they do well do we need another bank you kind of have to ask yourself that question in cersei do we need another bank how many banks do we need and services are all over the place man okay all right and once the bank is open they come in and make sure that the bank is financially sound and the bank is following sound business practices okay so they're looking at the financial statements is this bank profitable do they have enough reserves enough capital and they look at the business practices are they treating people fairly okay that could be tough too all right then 40 years later the next big law the federal reserve act of 1913 and this happened after a financial crisis okay so as i said in our first class or two um you have this cycle that happens and so you have a crisis what happens is you have practices that are destructive and that leads to a crisis which then leads to laws and regulation which then lead in part to the next crisis which then leads to changes in laws of regulation so around and around we go okay federal reserve for act 1913 so there was a series of financial panics okay and so they said you know what we need to have a national central bank that is not controlled by the politicians really important to try to minimize the politics you know who's bad about it about trying to mix politics in the federal reserve donald trump oh he screamed all the time that the federal reserve didn't uh didn't lower interest rates aggressively you know and he knew that he really didn't have um any impact on them that was just pure politics all right so their most important job is to control money and credit okay in order to promote stability low inflation and full employment so those are the things in their charter the federal reserve has two goals one is low inflation and then the other is full employment and sometimes those two things aren't consistent okay and sometimes they they emphasize full employment over inflation and sometimes it's the other way around like for the last 20 years or so the fed has been trying to get inflation up a little bit it's been too low okay we can write into deflation if we're not careful so what kind of inflation are we looking for two to three percent that seems to be a healthy level that everybody can deal with okay full employment what's full employment somewhere around four to five percent that's four point if employment gets drops below four percent we're going to have inflation all right the fed's other roles are to serve as the lender of last resort what does that mean if banks run out of credit they can go to the federal reserve and that's what happened back