May 26 marked the last day of the Global Master of Finance (GMF) immersion courses, and the DC portion will conclude with a full introduction and understanding of the role of Congress in financial regulation.
Our first speaker was a former member of congress; he took a unique angle – from a member’s point of view – to talk about how Congress gets involved in financial services. He started by describing a typical day of a member of Congress, to let us know how they look at financial institutions. It is surprising to know that for twenty years, he worked no less than sixty hours a week, and many times eighty or even a hundred hours. A member of Congress must try to be familiar with virtually every area that impacts their constituents, and spends most of the time meeting with constituents, going to committees, and getting involved in discussions in his or her areas of expertise.
Our speaker then talked about how Congress gets involved in financial services, which is primarily reactively. This means Congress usually does not get involved in financial services until there is some kind of crisis. Our speaker took the 2008 crash as an example, to illustrate how Congress and the Fed responded to maintain economic stability and set up a stimulus policy to resolve the world-wide panic when confronted with a financial crisis. We learned that for most members of Congress, regardless of party, they share a general philosophy to let the markets be markets, let people have the freedom to invest, and then try to set up some kind of safeguards to protect investors so that no one can take advantage of it.
Next, we took a tour of the US Capitol with a former US Congressman. He was a patient and knowledgeable person. During the tour, he introduced the history and some fun stories of the Capitol to us. He was also able to share some insights from a former Congressman’s perspective and an insider’s view.
We visited the original location of the Supreme Court, the Statuary Hall, the House Chamber, and the Speaker’s Lobby. The Statuary Hall, which is the Old House Chamber, displays statues of famous Americans. The most memorable part of the tour was the House Chamber. We were told to leave our bags, notebooks, phones, and other prohibited items in the Speakers’ Lobby before entering the House Chamber. The House Chamber is filled with rows of chairs. Our tour guide told us that the House of Representatives conducts legislative activities here. He also showed us his Congressman card that can be used to vote. When he voted, he would insert his card in a machine, and then would press the button of yes of no. Another interesting point is that in the House Chamber, which is part of the legislative branch, the President of United States can only enter via invitation, and does not sit in the highest chair. Instead, the President sits below the Speaker of the House within the House Chamber.
Then we went beneath the building. There was a very intriguing subway waiting for us, which took us to one of the Capitol office buildings. Our last speaker in Washington had experience in various political and financial areas. He has worked for a private equity firm, a hedge fund, and has participated in many kinds of economic policy settings. His experience itself is a good pattern that teaches us if someone in the finance industry would want to go further, finance knowledge is far from enough.
The speaker started from a very new view in the finance area: that the primary changes in finance always come from progress in technology. He stated that we can really feel the influences from blockchain and other kinds of FinTech rising to the next level. The young generations should pay more attention to it and explore more possibilities in this field. He then spoke about regulation.
Over-regulation is now a hot topic, but he emphasized that over-regulation is at least good for common consumers. He also mentioned that the Fed, SEC, and other regulatory authorities are trying to shorten the regulatory lag, which can seriously impact the effect of policies. One more interesting thing he told us is that any authority still can be wrong. He told us that one high-level person in the Fed considered the mortgage market healthy just before the global financial crisis. What we learned from this speaker is that although we are young now, we should always keep questioning what authorities say and do, and maintain the courage to challenge their voices, and that will help us to contribute more in the finance industry in the future.
We the GMF 2017 cohort are very grateful to have had the chance to learn about the US financial markets and regulation with the insightful speeches from the distinguished practitioners and field trips. This two week immersion course will definitely give us a holistic and deeper understanding of today’s global financial markets and will set the tone for our future studies and careers after graduation.
Guest Bloggers: Shuying (Sunnie) Li, Kedi (Kelly) Ni, Yao (Deborah) Shan, Lei (Isaac) Xia (GMF 2017)
This is a series of blogs chronicling the experiences of 42 Global Master of Finance (GMF) dual degree students during their two week immersion course in New York and Washington, DC. Each blog will be written by a small subset of students during their experience. Names of speakers and presenters at firms are anonymous at the request of the firms and course organizers.
and the areas in which the FDIC focuses.
Ian posed a series of questions to him, leading him to explain that after the global financial crisis, there were many changes and fluctuations in policy. While the Obama administration focused on restructuring the regulatory framework for financial institutions, the Trump administration aims to stimulate economic growth through cutting both regulations and taxes. Thus, it would appear as though America is set to continue on the de-regulatory and re-regulatory path that it has been on since 1990.
After departing the State Department, we returned to the Brookings Institution for our third lecture of the day. Our speaker was from the United States and Association of Southeast Asian Nations (US-ASEAN) Business Council. The US-ASEAN Business Council is an advocacy group that aims to foster economic growth and trade ties between the ASEAN’s ten member countries.
The first guest speaker of the day was a correspondent for The New York Times and an author. He briefed us on the political situation in Washington D.C. under the current administration; he saw it as an interesting time in current American politics, especially because one party controlled the the White House, the Senate, and the House of Representatives at the same time. The Trump administration is seeking a wide range of changes in tax policy, health care policy, and global trade. The speaker also discussed the vital role that automation will play in the US manufacturing industry, offering us another way to think about the future of manufacturing in the US. Later, the Q&A session also covered topics such as over regulation/deregulation, the tax cut, and budget cuts.
After lunch, our next speaker was a fellow in Economic Studies at the Brookings Institution, where he focuses on financial regulation and technology, macroeconomics, and infrastructure finance and policy. Today’s speech was focused on the Dodd-Frank Act, which he has worked on significantly. The act promotes financial stability, accountability, and transparency in the financial systems. He then discussed Dodd-Frank’s significant impacts on the financial regulatory environment, and the balance between economics of scopes and scale and the added costs brought by the Act. Also, he mentioned the fact that the current administration is attempting to roll back certain components of the Dodd-Frank Act and the rationale behind it.
With the evolution of the influence of the Federal Reserve on financial markets and the implications of the Federal Reserve’s actions on the US economy currently being significant, our final speaker was perhaps the best person to provide insight on the institution. She has a significant history with the Federal Reserve, and continues to monitor it closely. With the U.S. economy in its 8th year of recovery, monetary policy having clearly been effective in the recovery process, is currently not particularly controversial. However, it is expected that over the next 12 months, the Federal Reserve may look to make a couple of small increases in short-term interest rates and attempt to reduce the large size of the Fed’s balance sheet, which is primarily due to the quantitative easing during the Global Financial Crisis (2008).
