Financial service-Banking Essay Example | Topics and Well Written Essays - 500 words

Financial service-Banking - Essay ExampleThe U.S and European merchandise had enjoyed a lot of freedom thanks to deregulation and privatization in the pecuniary industry. However, this trend was to be poisonous a decade later. According to Anne Khademian the governments efforts to manage the financial crisis has been monumental (841). She continues to add that the relation back made major reforms in the financial industry. First there was the Dodd-Frank Wall Street Reform and the Consumer shield Act. These acts were aimed at regulating the unregulated financial industry, which had crippled the economy. This was an attempt by the government to reverse the actions of subprime lenders and investors, financial market intermediaries and credit rating agencies. Due to the unregulated nature of the financial and banking industry financial institutions were religious offering high fill rate mortgages. In sub-prime lending, banks were lending bug out higher interest grade to their cu stomers without considering the risk of default rates of their customers. The banks were also fast to approve the loans because of the high interest rates charged on the loans. During the financial crisis, at least four million people faced foreclosure due to their inability to consecrate loans. Consequently the banks were late in receiving their payments and meeting their credit obligations. The government had to step in and bail out the banks in an attempt to end the financial crisis. The U.S treasury and E.U commission pumped in billions of dollars and Euros to the banks in shape to save them from liquidity.The government plays an important role when it comes to stabilizing the economy. This is achieved by either lowering or change magnitude the lending bank rates. In the journal article, the author says, the response to the crisis caused by too much debt and interest rates manipulated interest rates too low (Khademian, 842). During the financial crisis, the government lowere d the interests lending rates to