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MSU / Integrative Studies Social Sci / IS 315 / What is the meaning of the sarbanes oxley act?

What is the meaning of the sarbanes oxley act?

What is the meaning of the sarbanes oxley act?

Description

School: Michigan State University
Department: Integrative Studies Social Sci
Course: Global Diversity/Interdepend
Professor: Y. sinha
Term: Fall 2016
Tags: ISS315 and Lecture Notes
Cost: 25
Name: ISS 315 Lecture 13 Notes
Description: These cover what was talked about in class on Tuesday, November 1st.
Uploaded: 11/01/2016
3 Pages 35 Views 2 Unlocks
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Lecture 13


What is the meaning of the sarbanes oxley act?



Tuesday,  November  1, 2016 12:49 PM

• Free market must be regulated because of the current issues we've faced • CEO has every incentive to think in terms of short-term

Short-term benefits by artificially inflating the price of their company  

stock

○ Not just CEOs

Between 2004 and 2008 the major banks of America had a negative balance  sheet

• Even when company is not performing well we are still compensating CEOs

Sarbanes-Oxley Act: protect investors from the possibility of fraudulent  accounting activities by corporations

Mandated strict reforms to improve financial disclosure from  If you want to learn more check out Where do the himalayans locate?


What is the problem with american corporate structure?



corporations and prevent accounting fraud

○ Making executive  compensation more transparent

○ Letting people know what CEOs are actually making in terms of money • Bulk of CEOs income coming from stock auctions

• CEOs are compensated at record rates

Could not tell what the bank as a whole was worth because they did not do  market-to- market accounting

○ Idea of trying to assess your value of assets at today's market rates ○ On paper, bank looks like it has a lot more money than it actually does

• Problem with American corporate structure has to do with transparency ○ Simply cannot assess what a bank is worth


What does the glass-steagall act do?



▪ Cannot compare bank A to bank B

1999: Congress repealed Glass- Steagall Act and replaced by Gramm- Leach Bliley Act We also discuss several other topics like What are the 2 houses that make up the bicameral legislature?

○ Glass- Steagall Act-separated investment banks from commercial banks ○ Every bank now is an investment bank We also discuss several other topics like What are the sideways curves of the spine?

Investment banks are not covered by government insurance but once we  

got rid of separation they had to  

○ "Too big to fail"  

• All of these major banks were heavily involved in derivatives

Derivative: essentially betting that the cost of a commodity will either go  

up or down at a future date

▪ A kind of insurance

• The insurer can afford to pay out a few claims Don't forget about the age old question of What is the meaning of undetermined coefficients?

They bet on the fact that there are enough people who don't need the  

'

           

Derivative: essentially betting that the cost of a commodity will either go  

up or down at a future date

▪ A kind of insurance

• The insurer can afford to pay out a few claims

They bet on the fact that there are enough people who don't need the  

insurance paid off  so that they don't have to pay everyone all at once

Interconnectedness of banking system: problems at one bank are likely to  spread to other banks

○ Effects global economy

This happened: all banks failed at once because they are interconnected with  one another

• A derivative can be taken out by anybody

No logical connection or relationship to bank or corporation in order to  

take out a derivative on that product

Pay day lenders argue with Congress that they should not be regulated because  they are providing a vital service

• Credit card companies have all sorts of hidden fees

○ Late payments

○ Transactions

• Consumer Protection had everything to do with protecting the bank ----------------------------------------------Cut-Off Point for Exam # 2-----------------------------------------If you want to learn more check out What are the categories of films that share some common qualities?

No matter what we try and do we just can't seem to reverse the cost of health  care

• We have to do something about climate change

○ Mass extinction of animals on the planet

• We're not willing to handle these issues

• Average worker today is productive than they have in the past • American productivity has continued to rise We also discuss several other topics like Who is leo szilard?

○ No being rewarded for increases of productivity

• In order for system to continue, the American consumer has to borrow money • Middle class; One crisis away from poverty

○ Do not have savings to deal with a crisis

Aggregate demand: not enough people who want to buy stuff in order to keep  the global economy going

• Countries like China and India have been pushed to adopt the American lifestyle

Trying to make them free market capitalist to enjoy same lifestyle in  

America

▪ But American lifestyle in unsustainable

□ Ecological damage is not something we can export abroad ◆ Pollution

We say they are primitive because they don't live like us but if they lived like us,  the world would come to a halt  

▪ But American lifestyle in unsustainable

□ Ecological damage is not something we can export abroad

◆ Pollution

We say they are primitive because they don't live like us but if they lived like us,  the world would come to a halt  

• Without American consumers, Chinese economy would crash ○ China is totally dependent on American consumerism ○ We can't live without them and they can't live without us

As developing economies begin to grow, their consumers would pick up  

decrease demand of American consumers

Even though India and China came into global economy , they have not  experienced what they have hoped

• Globalization has increased the wealth of the world but not evenly • Easy fix is to redistribute wealth

○ Through government programs that give money to middle class and poor

If you gave more loans or financial aid for higher education then people would  have more money to spend on other things to increase aggregate demand ○ Problem is: we juts do not have the political will to do it

Section of American population that is opposed to anything along  

those lines

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