1. Should there be government oversight of banks and financial industries, or would a new accounting standard be enough to stop a recession? By Erica Bennett

2. Table of Contents History of Government Oversight Laws Glass-Steagall Act of 1933 Financial Services Modernization Act of 1999 History of Sarbanes-Oxley Act of 2002 What is Sarbanes-Oxley Why so important Is it perfect

3. History of Government Oversight Laws What is the Glass-Steagall Act of 1933? Named for Senator Glass (D-VA) and Congressman Steagall (D-AL) Removed the conflict of interest’s in banks. Established FDIC (PBS.org)

4. History of Government Oversight Laws (cont.) Signed into law by President Roosevelt. Part of Roosevelt’s New Deal Helped to pull United States out of Great Depression New Deal changes took place from 1933-1938 (theindependent.uk)

5. History of Government Oversight Laws (cont.) Why was this law important? Removed conflict of interest’s in banks Made banks choose to be a lender or underwriter, not both Stabilized the bank industry What would have happened without it? Speculation that the Great Depression would have lasted longer

6. History of Government Oversight Laws (cont.) What is the Financial Services Modernization Act of 1999? Also know as Gramm-Leach-Bliley Act Senator Gramm (R-TX), Representative Leach (R-IA), Representative Bliley, Jr, (R-VA) Allowed banks to merge with investment companies Enacted by President Clinton in 1999

7. History of Government Oversight Laws (cont.) Why was this law important? Banks can offer savings and investment accounts Allows for large financial companies to merge Citigroup would not have survived without it What would have happened without it? Banking industry would have remained the same

8. Sarbanes-Oxley Act of 2002 What is Sarbanes-Oxley (SOX)? Named for Senator Sarbanes (D-MD) and Congressman Oxley (R-OH). Created Public Company Accounting Oversight Board (www.sarbanes-oxley.com) Made financial reports more transparent Also known as Public Company Accounting Reform and Investor Protection Act Also known as Corporate and Auditing Accountability and Responsibility Act

9. Sarbanes-Oxley Act of 2002 Why so important? Supposed to stabilize stock market after collapse of Enron, Tyco Int., Adelphia, Peregrine Systems, WorldCom, and Arthur Anderson Nobody was overseeing accounting practices until SOX was enacted Prevented companies from reporting traded stocks as revenue Stopped false revenue and expense reporting Made publicly traded companies transparent and accountable

10. Sarbanes-Oxley Act of 2002 Is it perfect? SOX is time consuming and expensive to implement Helped speed recession by decreasing investor confidence Makes the CEO liable for company downfall This might slow company growth Did not help prevent accounting shortfalls in: Bear Sterns, Lehman Bros, AIG or Merrill Lynch (www.aei.org)

11. Sources Frontline. “Frontline: The wall street fix: Mr. Weill goes to Washington: The long demise of Glass-Steagall | PBS." PBS. Frontline, 8 May 2003. Web. 10 Nov. 2009. <http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html>. Cornwell, Rupert . " The Big Question: What was Roosevelt's New Deal, and is something like it needed today? - World Politics, World - The Independent." The Independent | News | UK and Worldwide News | Newspaper. The Independent World, 17 Sept. 2008. Web. 10 Nov. 2009. <http://www.independent.co.uk/news/world/politics/the-big-question-what-was-roosevelts-new-deal-and-is-something-like-it-needed-today-932942.html>.

12. Sources "Gramm-Leach-Bliley Act of 1999." United States Senate Committee on Banking, Housing and Urban Affairs : Home. Senate.gov, 1 Nov. 1999. Web. 10 Nov. 2009. <http://banking.senate.gov/conf/>. "Sarbanes-Oxley - Financial and Accounting Disclosure Information." Sarbanes-Oxley - Financial and Accounting Disclosure Information. Sarbanes-Oxley, 19 Nov. 2002. Web. 10 Nov. 2009. <http://www.sarbanes-oxley.com/section.php>.

13. Sources Gingrich, Newt , and David W. Kralik . "Articles & Commentary." Welcome to AEI. San Francisco Chronicle , 5 Nov. 2008. Web. 10 Nov. 2009. <http://www.aei.org/article/28893>.