Prepare an evidence-based business report (3-5 pages) that explains how relevant regulatory considerations impact a bank’s business strategy and supplies recommendations for navigating the current regulatory environment.
This assessment will give you the opportunity to serve as economic adviser to a bank seeking recommendations for navigating the current regulatory environment.
Banks face a number of costly mandatory regulations. For example, banks need to make sure they are in compliance with the Dodd-Frank Act and Basel III. In December 2011, the U.S. Federal Reserve announced that it would implement most of the Basel III rules. Under Basel III, banks need to meet certain leverage ratios and maintain minimum capital requirements. Specially, under Basel III compared to under Basel I and Basel II, the Common Equity Tier 1 capital ratio increased from 4 percent to 4.5 percent, and the minimum Tier 1 capital jumped from 4 percent to 6 percent. The overall regulatory capital did not change at 8 percent. The leverage ratio (which is calculated as Tier 1 capital divided by the total of on- and off-balance assets minus intangible assets) can be no more than 3 percent. Under the Dodd-Frank Act, banks are required to conduct annual financial stress tests. The Sarbanes-Oxley Act is of particular interest to publicly traded banks.
You are an economic analyst specializing in banking regulations at a consulting firm that advises a variety of client organizations, including investment firms, commercial banks, and policy advocates. Your immediate supervisor has approached you with two potential clients who need help understanding and navigating current regulatory considerations. Choose only one (not both) of the following clients to advise:
You are an economic analyst specializing in banking regulations at a consulting firm that advises a variety of client organizations, including investment firms, commercial banks, and policy advocates.
Address the following in an evidence-based business report for the client bank you selected above: