Seven years later, we are still recovering from a recession that left many Americans without jobs, and with what still is for some, a destitute future. For what seemed like years, politicians, banks, and all those who seemed to have something to lose, attempted to cover up the reason for the financial crisis, attempting to convince the rest of us that we found ourselves in the situation because of systematic miscalculations.
A March 2015 article by Portia Crowe, informed us of the unreported power shift that seems to lead us down an all too familiar path, with the Federal Reserve taking control of Wall Street Bank Regulations, from the hands of the New York Fed. This significant shift in power matters because in the years leading up to the financial crisis, the Federal Reserve, not the New York Fed, was responsible for overseeing the firms that caused the most trouble.
So why is Washington attempting to keep the New York Fed out of high-level regulatory policy meetings, if the goal should be to prevent a recurrence of the financial crisis?
Republicans Trying to Take Down Dodd Frank
As reported by the Huffington Post last week, Dodd-Frank is starting to work. Which means Republicans and their big money super PAC donors aren't too happy about it. Republicans unanimously opposed Dodd Frank Wall Street Reform and Consumer Protection Act, or simply Dodd-Frank; a collection of federal regulations, primarily affecting financial institutions and their customers, in an attempt to prevent the recurrence of events that caused the 2008 financial crisis.
Despite opposition from Republicans when the law was enacted, it has survived several attempts to weaken the law, many believing that Dodd-Frank is an overreaction to the 2008 financial crisis. The latest such attempt to weaken the law is legislation sponsored by Michael Fitzpatrick (R) of Pennsylvania, a member of the House Financial Services Committee.
- Established government agencies such as the Financial Stability Oversight Council and Orderly Liquidation Authority. They monitor the performance of companies that are considered too big to fail, in order to prevent widespread economic collapse.
- Provide money to assist with the liquidation of financial companies that been placed in receivership because of their financial weakness.
- The council can break up large banks that may pose as risk to the financial system because of their size.
- The Federal Insurance office identifies and monitors insurance companies that may pose a systemic risk.
Fitzpatrick received more than $310, 000 in donations from the finance and banking sector between 2013 and 2014, and is the representative behind the "Promoting Job Creation and Reducing Small Business Burdens Act". A bill "intended to make technical corrections" to Dodd-Frank.
It's insightful to note that heavy de-regulation of big banks is the root cause of so many millions of jobs lost during the Great Recession. Indeed. It is ironic that yet another bill endorsed by Wall Street hides behind the moniker of job creation.
The bill has several troubling elements, those that matter most its current state however, are the three that directly disrupt Dodd-Frank.
- Allows large banks hold on to certain risky securities until 2019, two years longer than currently allowed.
- Prevents the Securities and Exchange Commission from regulating private equity firms that conduct some securities transactions.
- The bill would make derivatives trading less transparent, allowing unseen risks to build up in the system.
Taxpayers should remain educated in regards to reversals regarding Dodd-Frank, because, in many occasions they may be on the hook when the institutions lose big bets. After December 2014's reversal of part of the Dodd-Frank law, (barring derivatives from being traded in federally insured units of banks), taxpayers may be on the hook for bailouts, if losses occur in the banks' derivatives books.
Large corporations are clearly taking advantage of this internal battle within the administration, many misrepresenting themselves, hoping to slip through the cracks during a transition period that has many on edge. That is where Robbins Geller Rudman & Dowd LLP comes in, prepared to challenge these larger corporations.
The Chinese government made it evident that no one is protected from scrutiny within its financial system with the release of a scathing report accusing its e-commerce giant Alibaba of encouraging, and allowing illegal activity. A major player in the Chinese economy, Alibaba has been misrepresenting itself and the goods in its marketplace, allowing fake goods to be marketed as anything but that.
Alibaba has been hit with a class action suit after failing to disclose that its executives did meet with the government to discuss the sale of counterfeit, "fake" goods.
SAIC reported that fewer than 40% of goods it tested on Alibaba's popular Taobao e-commerce site were authentic, state media has reported. Alibaba criticized the report as unfair.
IBM is Not Too BIG
Alibaba is not the only giant in the crosshairs of Robbins Geller Rudman & Dowd LLP. The law firm is well known for representing whistleblowers, has filed a class action on behalf of an investor who was influenced by false information provided by IBM management violating the Securities Exchange Act of 1934.
According to the complaint, IBM mislead investors during the Class Period, regarding the value of their microchip manufacturing operations, also known as Microelectronics business. The misleading information provided by IBM caused the inflation of its common stock, reaching a high of$196 per share.
Bill Freza, who predicted the dot-com collapse of 1999 in an article titled, "Living in the Shadow of Vesuvius, The Dotcom Economy Parties On") predicts another disaster in the Forbes article, How to Protect Your Retirement Assets From The Coming Crash.
On the surface, the market seems to be shifting in a positive direction, but simply making time to stay informed, helps us to recognize similarities to questionable behaviors in the financial sector that caused the Great Recession.
It's no longer about simply ensuring that you make out in the event of another crisis, but that you protect yourself from abuse. Putting together a plan of action now that will help to protect you from a potential aftershock is the only way, other than simply staying informed, to be proactive in the protection of your retirement.
For more information about either class actions lawsuits or Robbins Geller, please visit http://www.rgrdlaw.com.