In essence, they forced European banks, and, more importantly, the European Central Bank itself e.g.
when gauging the solvency of EU-based financial institutions, to rely more than ever on the standardized assessments of credit risk marketed by two private US agencies- Moody's and S&P, thus using public policy and ultimately taxpayers’ money to strengthen an anti-competitive duopolistic industry.
In this essay, I will review the key sources of fragility in the core financial system.
I discuss the weakly supervised balance sheets of the largest banks and investment banks; the run-prone designs and weak regulation of the markets for securities financing and over-the-counter derivatives; the undue reliance of regulators on market discipline; and the interplay of too-big-to-fail and the failure of market discipline.
The objective of monitoring compliance by listed companies with their disclosure requirements is to ensure that investors have access to essential and adequate information for making an informed assessment of listed companies and their securities.
Banking acts lay down rules for banks which they have to observe when they are being established and when they are carrying on their business.In most cases, financial regulatory authorities regulate all financial activities.But in some cases, there are specific authorities to regulate each sector of the finance industry, mainly banking, securities, insurance and pensions markets, but in some cases also commodities, futures, forwards, etc.This analysis is similar to Figure 10.1 in Reinhart and Rogoff (2009).For more details see the help file for "banking Crises" in the Ecdat package available from the Comprehensive R Archive Network (CRAN).In short, the core financial system ceased to perform its intended functions for the real economy at a reasonable level of effectiveness.As a result, the impact of the housing-market shock on the rest of the economy was much larger than necessary.For example, in Australia, the Australian Prudential Regulation Authority (APRA) supervises banks and insurers, while the Australian Securities and Investments Commission (ASIC) is responsible for enforcing financial services and corporations laws.Sometimes more than one institution regulates and supervises the banking market, normally because, apart from regulatory authorities, central banks also regulate the banking industry.Financial regulation forms one of three legal categories which constitutes the content of financial law, the other two being market practices, case law.Financial regulators ensure that listed companies and market participants comply with various regulations under the trading acts.