By: Ernst Ducena
OIEE Contributor

Nearly two years after the collapse of Lehman Brothers, and after intense debate, negotiations and concessions to politicians and lobbyists, congress finally passed financial regulation reform; or something to that effect. While being hailed as the most sweeping reform seen in financial regulation since the Great Depression, the Dodd-Frank bill, named after co-authors Senator Christopher J. Dodd (D-CT) and Representative Barney Frank (D-MA), falls far short of those aspirations.

The economic meltdown of 2008 was due in large part to failure of existing regulation to keep up with the expanding complexities of finance. In that regard, the Dodd-Frank bill added nothing new. Instead of clear guidelines, the bill, with many watered-down proposals, creates new agencies and new regulators with more authority than before without concretely addressing some of the factors that contributed to this mess in the first place. Consider this statement from Senator Dodd: “We can’t legislate wisdom or passion. We can’t legislate competency. All we can do is create the structures and hope that good people will be appointed who will attract other good people.” In other words, we will put just put in new people and hope they are good enough do their job effectively. How is that any different from what we had before?

One key component, and one of the few bright spots, of the new bill is the creation of the Consumer Financial Protection Bureau-a new federal agency tasked with policing the loans and other related products and services that banks and others sell to individuals. This should make loans more transparent and easy for consumers to understand. Rules will also be implemented to protect consumers from predatory lending practices by banning “no-documentation” mortgages and lender kickbacks to brokers for originating high-cost loans. In addition, lenders will be required to provide a credit score to consumers when adverse action, such as being denied a loan or getting less favorable terms, is taken against a consumer as a result of their credit score.

Another key component of the bill is the Financial Stability Oversight Counsel. This group of regulators will be tasked with monitoring systemic risk and making recommendations to the Federal Reserve, who will then create stricter rules regarding capital, liquidity and risk management. The Counsel’s intent is to end the “too big to fail” policy of the last two years, where companies who were so big that their failure would produce catastrophic results for the overall economy, were bailed out using tax-payer money. The Counsel will have the authority to dismantle firms that pose a risk to the overall system, however the guidelines for how this is to be done remain to be seen.

The issue of “too big to fail” would have been much more effectively addressed with the “Volcker Rule”-named after Federal Reserve Chairman Paul Volcker. Under the original Volcker Rule banks would have been barred from practices such as proprietary trading and investing in hedge funds and private equity groups. Under the revised version of this rule, however, banks can invest up to 3% of their capital in hedge funds and private equity groups. Three percent may not sound like much, but when considering that 3% each of JP Morgan, Citi, and Bank of America’s add up to over $11 billion, we get more perspective on how much money is involved. Furthermore, this 3% limit does not significantly curb the amount of money these banks already commit to those practices.

The Dodd-Frank bill’s implications for the average consumer are, at best, uncertain. The creation of the Consumer Financial Protection Bureau, although a positive, still has its limits. For example, auto dealers, which provide financing for car buyers, are not under the Bureau’s jurisdiction, which means they can proceed with business as usual. The bill’s failure to adequately address “too big to fail” creates a lot of uncertainty in the event regulators have to take action concerning a company who poses a threat to the economy. We are essentially back at square one: relying on regulators’ judgment as opposed to preventive measures that make a similar collapse less likely. And since many of these new rules will take years to implement we can only do what Senator Dodd so eloquently stated: we can only “hope that good people will be appointed who will attract other good people” and do what needs to be done.

To ask for regulations that guarantee the prevention of future recessions, or even a collapse, would be grossly unfair and unrealistic. Business and financial innovation will always be a step ahead of regulations since regulations are reactionary by nature. However when what we pass for reform come well short of addressing the issues we already know about, we can hardly call that reform.

Ernst Ducena holds bachelor degrees in French and Psychology and a master’s degree in Psychology. Upon graduation, Ernst worked as a social services professional before transitioning into the field of financial services. Ernst currently holds a General Securities Representative (Series 7) license.

One may ask why America needs to rebuild. When the average person looks at our sagging economy, our crumbling financial markets, our legal layovers, our political debacles and our educational mishaps, one can see why America needs to “Rebuild.”

This process won’t happen with bureaucrats or even our businesses. It will happen with YOU–the American citizen. Please join All About Business (AAB) for a night of discussion at Touro Graduate School of Business where a team of panelists will speak about this very topic: what can America do to help rebuild these broken systems?

Panelists, among others, include:

RYAN MACK, President, Optimum Capital Management; CNN Contributor

HON. CHUCK LESNICK, President, Yonkers City Council

DIAMOND WEISSERMAN, United Nations

HON. GEORGE MARTINEZ, Founder, Global Block Foundation and US Cultural Envoy to Latin America.

MICHELL MITCHELL, Executive Director, The Phenomenal Women’s Group, Inc.

VINCENT MORGAN, Founder, Harlem NOW

MICHAEL DESTIO, Assistant Superintendant, Half Hallow Hills School District

DARNELL CANADA, Founder, REBUILD

MODERATED BY: DIANE KING, Business Anchor, NY1

To register for this event, you MUST RSVP at: http://rebuildingamerica.eventbrite.com/

This is an event you will not want to miss! Space is LIMITED and tickets are going FAST!

All About Business (AAB) is a global program run by the Optimum Institute of Economic Empowerment, Inc. geared towards the spread of ‘empowerment’ through social movement and grassroots advocacy. Our purpose is to cultivate talent among our youth and encourage them to become active members of the community through leadership, philanthropy and professional responsibility. We seek to provide educational services for the general population through panel discussions, media outlets, seminar events and networking opportunities. We are committed to provide community service projects and professional development programs for neighborhoods in need and to inspire all people to create the positive change they wish to see in the world. AAB is under the umbrella of the Optimum Institute of Economic Empowerment, a non-profit organization founded by financial entrepreneur and CNN commentator Ryan Mack. See More

Elisabeth Greenberg, writer for All About Business, has a brand new article up about her experiences at her first “real” job in the retail sector. Check it out here, or visit www.allaboutbiz.org.

by: Clair Schwan

OIEE Writer

Looking back, it’s easy to identify why education was important for me, and it’s easy to explain why it’s important for you. The important question to answer is: can you see why it’s important for you? Sometimes that’s difficult, especially when you’re facing it or going through it. Years of education can seem like a lifetime of effort. Often school can be tedious, and there are many more entertaining things to do than sit in a classroom. Nevertheless, instead of viewing your school work as a lifetime of effort, think of it as an investment of a lifetime – an investment in you and your lifetime…

To continue reading this newsletter, please click here

by: Andrew Bruskin

Director, Media Publications, All About Business (AAB)

It was May 7^th and it was my first day of work.  I was on the Long Island Railroad (LIRR) heading to a law office, located in downtown Brooklyn.  I had no clue what to expect.

“Andrew, close the door.”  These were the first words my boss told me as the door slowly closed and I took a seat.  “Andrew, I run a very tight business here.  Don’t mess up my cases.”

And so started my summer internship at a law office in downtown Brooklyn.

I learned much at this summer job, including things I never knew at law school.  Here are just some of those things…

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FOR IMMEDIATE RELEASE

*** Please Post and Publicize ***

For Information Contact:

Kareem Hertzog, Executive Director

The Optimum Institute of Economic Empowerment, Inc.

Phone: 877-758-3224 

Email: info@optimuminsitute.org 

Optimum Cleans Up Brooklyn

On July 10^th, 2010 in direct response to the high amounts of litter in the community resulting in pricey sanitation fines for small businesses and suffering property values, The Optimum Institute of Economic Empowerment (“OIEE”) decided to take a stand against filthy streets by organizing a full day to pick up trash. It is common to see those charged with a crime to have to pay a penalty of community service that you will see out removing litter from the streets; however, Optimum organized a group of over 50 volunteers who were willing to congregate and do the same simply for the love of their community!   

From 8:00am to 12:00pm, volunteers for the OIEE filled multiple bags of trash as they walked down Fulton Street in Brooklyn, New York.  They began on the corner Ralph Avenue and Fulton Street, and walked three miles in the hot sun to their final check point of Lafayette Street and Fulton.  Prominent members of the community who joined the effort were Phillip Kellogg – FAB Alliance Director, Mike Rafferty – Bedford Stuyvesant BID President, Paul Cain – Hip Hop Artist, and many members of the Brooklyn community. 

Phillip Kellogg, FAB Alliance Director stated, “It was encouraging to see so many people out who were so concerned about what I am fighting everyday…litter. Hopefully this will help to make my job easier as more people become more aware of the problems caused by litter in the streets.”

Ryan Mack, President of The Optimum Institute of Economic Empowerment stated the following as he finished walking three miles of litter removal, “I can honestly say that while I have always known that litter was destructive, I now have a new outlook on each piece of paper that I see on the street in my community because I helped to keep it clean…we all took ownership of this issue of litter in our streets. If more people would take the time to participate in events such as this there is no doubt that more people would join in the fight. We didn’t organize this event to take the place of those organizations whose job it is to keep the streets clean, we set out to prove a point that there are many people in the community who are willing to take a stand against filthy streets and today we were successful.”

Kareem Hertzog, Event Organizer and Executive Director of The Optimum Institute of Economic Empowerment stated, “This was a great day for the community. You saw over 50 professionals who could have been doing any number of things differently on a Saturday come out to pick off trash from the streets and say NO MORE to litter, NO MORE to a lack of pride in their neighborhood, and NO MORE to the mentality of letting someone else do the fighting that should be done by ourselves. We made an impact today…we made a difference today…let’s keep this going through tomorrow and beyond!”

Click here to view video of Ryan Mack interviewing volunteers of the clean up…

About The Optimum Institute of Economic Empowerment

OIEE has a mission to create and implement tangible economic empowerment programs. As a change agent OIEE will develop and administer programs that will focus on teaching and increasing exposure to principles of financial literacy within communities of need.  Working individually and also in collaboration with other community constituents, OIEE believes that individuals, businesses and communities can be educated to understand and adhere to those financial principles which will serve as a solid foundation for future economic growth and sustainability.

by: Patrick Kenney

Writer, All About Business

How does the U.S. military define victory in Afghanistan?  Moreover, can the war in Afghanistan be won at all?  If the war can be won, what exactly would we have accomplished?  Answering these questions are crucial because they should help to define whether U.S. forces have a clearly defined reason, rationale, and most importantly mission for fighting in Afghanistan in the first place…

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By: David Sarna

Writer, All About Business

According to the Wall Street Journal, Bank of America Corp. admitted to making six transactions that incorrectly hid from view billions of dollars of debt, following a bid to cut the size of a unit’s balance sheet and meet internal financial targets…

To read the rest of this newsletter, please click here

By: Anya Parampil

Writer, All About Business

Well, everyone…

Quite the endeavor it is, to match a cliché introduction line to a piece on the World Cup.

It isn’t quite “that time of year again!” if it only takes place every 4. It’s not “that season again!” when, say, Australian fans cheer in winter while their German counterparts celebrate in summer. Hey, when it’s the whole world we’re talking about, everyone from Father Time to Mother Nature is varying just a little. But between attempts to put my finger on a universal time frame, I think I’ve got it…

To read more of this newsletter, click here: http://allaboutbiz.org/blog/soccer-fans-of-the-world-unite-take-over/