The Wall Street reform and consumer protection act:
Solution to the financial crisis or an obstacle to future recovery?
Two years after the financial crisis broke out, the US Congress has voted the Dodd-Frank "Wall Street Reform and Consumer Protection Act" with the stated aim to create a sound economic foundation, to grow jobs, protect consumers, rein in Wall Street, end too big to fail and prevent another financial crisis.
R. Amzallag wrote his analysis of the Dodd-Frank legislation in a CIRANO Paper. CIRANO took this opportunity to interview Mr. Amazallag on his assessement of this piece of legislation.
For Discussion document
Formerly president of BNP-Paribas Canada and now Guest Fellow at CIRANO, Robert Amzallag has given his perspective of the origin of the financial crisis and the potential of future development in a series of CIRANO discussion papers:
This paper is meant to provide a fresh retrospective on the events shaping the evolution of the financial crisis and economic recession since last year. While continuing and updating last year’s analysis, the author offers an assessment of the three potential scenarios through which the crisis could have evolved. This update on the crisis derives from a reflection, sometimes a criticism, of the key players' role in both the causes and the solutions. Those are the governments, central banks, regulators, financial institutions, and their directors. It is from this retrospective analysis that the author can conclude by sharing his impression regarding future developments of the economy and the financial sector.
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Scénario 1 : Reprise rapide
Rebondissement rapide et sans heurts de l’économie grâce à une prompte reprise sur les marchés, suivant l’injection massive de liquidités par les banques centrales et gouvernements.
Scénario 2 : Aggravation de la récession
Poursuite et aggravation de la récession, faiblesse des marchés et surenchère au niveau de l’intervention financière des gouvernements qui se mettraient ainsi à risque.
Scénario 3 : Reprise modérée
Reprise modérée à court terme et donnant une plus grande marge de manœuvre aux acteurs principaux (gouvernements, banques centrales, autorités de régulation et institutions financières) pour se coordonner afin d’identifier et de corriger les sources de la crise.
The centerpiece of an evening on the Financial crisis hosted a year ago at CIRANO was an analysis of the origin of the crisis by Robert Amzallag.
See the Web Event
Mr. Amzallag’s presentation combines a retrospective analysis of root causes of the crisis followed by some thoughts on what’s to come. As to causes, he isolates three trends that have been gathering force over several decades. These include the erosion of certain stabilizing factors, particularly in the credit market, that has lead to extreme concentrations of risk. Looking to the future, Mr. Amzallag cautiously explores the consequences of several scenarios or responses to the crisis. The first two represent the pursuit of policies reflecting established political sensibilities involving different degrees of government intervention. The third represents a more thoughtful re-appraisal of the different functions that the key players—governments, central banks, regulators and financial institutions —should pursue and should be left to pursue.
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Timeline : Financial Crisis 2008-2010 provides graphs on the chronological evolution (2008-2010) of many key financial indicators.
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