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As history dictates, every modern financial system will see a financial crisis, but according to analysts, for it to not be as devastating, certain measures must be done.

Michael Lent, chief financial officer of Veris Wealth Partners in New York says, the country is in a crisis of faith in the economy. He believes people don't trust their mortgage companies and therefore question their investments. He thinks in order to place that trust in the economy back, regulations must be put in place to make sure that the consumers and the investor are protected.

Michael has been lobbying for the creation of an independent consumer protection agency in Washington. He's fighting for the regulation of companies like mortgage lenders so that consumers will be protected from the unscrupulous bank practices we've seen in the past.

Meanwhile, analyst Steven Leslie from the Economist, believes the current financial regulatory system in the country working under the Federal Reserve and other agencies has failed.

He says, some banks lobbied strongly against the regulatory proposal in the bill thinking it'll stifle innovation in the financial market.

In 2008, the government enacted a 700 billion bail out fund to save financial institutions from collapse, ultimately costing taxpayers. But what caused these companies from a near collapse?

Steven Leslie's analysis shows that when AIG collapsed, it's complete failure would've brought down dozens of other financial firms. He believes that if derivatives are cleared by an organized market, the detrimental domino effect we saw in the recent financial meltdown could've been avoided.

The issue of regulating derivatives is a hotly talked about subject in the bill. It's significance comes from the fact that these over the counter derivatives almost brought down the biggest firms in the financial system.

Republicans and Democrats both agree there's a need for reform. But with the upcoming electorates, it's in both parties best interest to win the debate. Analysts are saying that the key to passing the legislation will be to do it in a bi-partisan fashion.

Category:

News & Politics

Tags:

• Ebru News
• Claire Celdran
• U.S. Financial Crisis
• Financial Reform Legislation