End of the banking riot...

In the article of New York Times, financial regulations will be implemented soon.
This financial regulations will strictly tight the banking activities.
Basic banking activities like mortgage are fine but more complicated activities like derivatives will be very tightly regulated and monitored.

We might think that this is good regulations on banks not to go beyond their ability and scope to make money. This can secure banking activities safer than before and U.S will recover from messed financial market.

From my perspective, this is good but too much regulations that could slow down the liquidity of market. It was too much boosting of financial activities before around 2007 but there are some companies, especially venture businesses, received this benefit. Venture businesses are not easy to borrow money to run their business and that's why many venture capitals exist.

The new financial regulation could kill these companies since bank cannot let they borrow money like before. Even ordinary customer like me can lose the benefit. As an example, there could be less credit limit and not easy to raise again. (I have very good credit though...) This could limit people's initiative to do shopping, leading to shrinking consumer market too. In total, U.S could go to deflationary spiral. So what's good for this regulations then?

As nature of U.S economic history, there could be a little excessive banking activities to make the innovation come true, which sometimes consume enormous amount of money. I don't say we always need such a excessive money but there is no way to make an innovation if excessiveness is not possible.

The financial regulations mainly consists of three parts. First is "more authority to monitor everything from mortgages to complex securities", second is "financial firms would be forced to reduce the debt they take on and to hold more capital in reserve", and the third is "the so-called Volcker rule".

First two rules are kinda understandable since it enhances bank's capital. But third one does not make sense for some banks who's insured federally.

Based on these rules, how banks will make up their bills? They will pass it to us! More transaction fees or anything else...

It is end of excessive banking but started weigh slow down banking.....dawn of small banking life :p

Stay Tuned!
M.K