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The Dropout 

8/20/2014

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The Federal Reserve has been criticized by congress in regards to their definition of the word “insolvent.”  During the economic crisis of 2008, trillions of dollars were loaned to keep the banking system afloat.  At the time of the bailouts, the Fed defined insolvent as being institutions that were already in bankruptcy.  Banks that were at the point of bankruptcy, but had not yet filed could still obtain a bailout.  To keep future bailouts from occurring the Dodd-Frank Act became a law in 2010.  It is better for the Fed to provide big banks with the guidance to solve future problems, as there is little effort that goes into being bailed out.           

Banks don’t fail overnight; a bank in risk of bankruptcy takes years to develop. Dropouts often occur due to poverty or lack of preparation.  The bank may be mismanaged, or make bad lending decisions.  There may be too many bad investment decisions, or an economic slowdown.  For those who thought they needed to know their math to succeed in the banking industry, remember it doesn’t matter if you’re good at numbers when you can’t read the problem.

Earlier this month, both the Fed and FDIC dismissed many big banks “living wills” as being unrealistic.  Maybe big banks didn’t understand the intentions or the requirements of a living will.  These “living wills” are meant to provide an exit strategy for the bank to enter bankruptcy if they were to fail in the future.  The “living wills” financial institutions provided for review consisted of public assistance and unrealistic views of how their stockholders or depositors would respond in the event they were to go under. (Eavis, 2014) Knowing how to read and write opens the door to the world of learning, and so many big banks just aren’t there yet.            

Big banks won’t be the only ones to benefit from the skill of improved literacy.  Their own health depends on their understanding of regulations, as well as their ability to calculate risk and implement preventive measures.  The economy as a whole can benefit from a big bank’s ability to read and follow regulations.    

The Fed won’t be advertising forbearance.  Time limits and hefty fees are being requested by lawmakers of the Fed for any future aid to big banks. (Hopkins, 2014)  This will make planning and budgeting key for these financial institutions.  They shouldn’t plan their budget based on the Fed’s discounted loans, but rather on the Fed’s two cents of what the requirements are for a legit living will.  Some dropout’s win by chance, in this case there is the chance to learn.  

Works Cited 
Eavis, P. (2014, 08 05). Federal Reserve and F.D.I.C. Fault Big Banks’ ‘Living Wills’. Retrieved 08 20, 2014, from The New York Times: http://dealbook.nytimes.com/?module=BlogMain&action=Click&region=Header&pg&version=Blog%20Post&contentCollection=Business%20Day
Hopkins, C. (2014, 08 18). Fed Urged to Ensure Emergency Lending Rules Bar Bailouts. Retrieved 08 20, 2014, from Bloomberg: http://www.bloomberg.com/news/2014-08-18/fed-urged-to-ensure-emergency-lending-rules-bar-bailouts.html
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Compliance Buyout

8/6/2014

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Bloomberg’s messaging system has enjoyed success due to the vast amount of users on Wall Street, since the financial industry has had a hard time finding an acceptable replacement.  The sophisticated messaging system is part of a trading and news terminal, which allows users to share live data, charts, and analysis.  As the messenger is part of package deal with the data terminals, they run the banks roughly $20,000 a year.  Aside from the price, another downside that led Wall Street to look at other alternatives were reports of Bloomberg’s news team having access to what was thought to be private information regarding a banks use of the messaging system.

Early in 2013, Goldman Sachs set out to find an alternative to Bloomberg’s instant messaging service. There were several applications that wanted to be the go to messaging service for Wall Street, but they must maintain a system that can be regulated.  Due to security laws it’s unlikely that Wickr’s messaging without a trace will be the financial sector’s instant communication service of the future.   

Nico Sell, founder of Wickr would like to see her app become the primary messaging service for Wall Street.  The top-selling points of Wickr include the option of sending secret messaging between stockbrokers and traders.  The encryption within these messages allows only the receiver to view, and will cut down on government snooping.  The sender has the option of setting an expiration date for the message to self-destruct.  The no metadata feature allows a sender to remain anonymous, as messages can’t be monitored or tracked.  A shredder feature allows the device to rid itself completely of the deleted files.  For anyone out there who is terrified by this idea, “…Sell said she's currently devising a system that would allow the SEC limited access to traders' conversations -- but not all at once.” (Pagliery , 2014)  Limited access to traders’ conversations is not going to prevent white-collar crime; most likely the SEC would require more.

In a joint venture, big banks are considering an investment in a messaging start-up system called Pervo.  Pervo holds the bonus feature of being transformed into what the customer wants.  Users won’t be required to adapt to the system, as they have the option to make changes as they see fit.  As the Pervo applications are free, there are limited details at this time as to whether the Bloomberg terminals will still be used in the background or as to what the big banks investment in Pervo will include.  (Lauren Tara Lacapra, 2014)

For those who give a puck, it’s not so much about erasing a bad decision as it is in the NHL.  It’s about having the option to transform instant messaging to work the way they want it to.          

Works Cited 
Lauren Tara Lacapra, a. J. (2014, 08 03). Exclusive: Goldman group set to buy message system as alternative to Bloomberg - sources. Retrieved 08 06, 2014, from Reuters: http://www.reuters.com/article/2014/08/03/us-goldman-messaging-idUSKBN0G303920140803
Pagliery , J. (2014, 06 27). Secret message app Wickr moves to Wall Street. Retrieved 08 06, 2014, from CNN: http://money.cnn.com/2014/06/27/technology/security/wickr-finance/index.html

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    My banter was on current affairs and ran from 2011 - 2016. I currently enjoy writing satire and horror shorts.

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