Financial reform under the Dodd-Frank Act is necessary – and expensive. (Photo Credit: CC BY-ND/iChaz/blogmosaic)

The Dodd-Frank Wall Street Reform Act was intended to save U.S. consumers a significant amount of money – but at what cost? With any governmental undertaking, there’s a financial burden taxpayers shoulder. According to a Government Accountability Office (GAO) report, that burden will amount to as much as $2.9 billion over five years, the price of Wall Street reform.

Financial stability is not entirely dependent on taxpayers

While it may seem as if taxpayers are being asked to pay without end, the Dodd-Frank Act reportedly will not require full taxpayer subsidization to function, writes the Wall Street Journal. Of the 11 agencies that will be responsible for putting the Dodd-Frank laws into practice, six are either fully or partially funded by revenues and assessments from companies and/or entities that the Dodd-Frank agencies oversee. Three others are covered by congressional appropriations, while the watchdog Consumer Financial Protection Bureau will receive its money from the Federal Reserve, all of which was originally obtained from assessments and other revenues, rather than from taxpayer wallets.

Financial institutions will pay the government more

Banks, credit unions, investment houses and short term loan outlets are slated to pay the U.S. government more to operate under Dodd-Frank laws. This has raised concerns within the financial community that competitiveness will be hampered by over-regulation, and House Republicans have taken up that torch, using GAO report findings to support the idea that Dodd-Frank is too much for a slowly recovering economy to bear.

Breaking down the numbers, the GOP plans to highlight such things as the $975 million cost for the 11 agencies in the first year of the Dodd-Frank Wall Street Reform Act. That’s the baseline used to project the five-year, $2.9 billion price tag. Moreover, hiring 2,600 full-time workers (including 1,225 for the Consumer Financial Protection Bureau) will produce significant cost.

Other highlights from the GAO report

From the upcoming GOP presentation to the House Financial Services Subcommittee on Oversight and Investigations, the Journal points out the following:

• A Fed estimate from earlier this year projected a cost of $77.5 million to pay 290 full-time staff dedicate to Dodd-Frank implementation. Three new offices – the Office of Financial Stability Policy and Research, Financial Market Infrastructures Risk Analytics and Financial Market Infrastructures Oversight – were created to run Dodd-Frank laws smoothly.
• The first of the three Fed sub-offices, the Financial Stability Oversight Council, will pay seven full-time staff up to $7.9 million beginning in fiscal 2012.
• The Office of Financial Research has $74.5 million earmarked for use in fiscal 2012 and will hire 135 full-time staff to perform duties under Dodd-Frank.

Sources

Dodd-Frank Act Summary

Government Accountability Office

Wall Street Journal

GOP on what Dodd-Frank might cost small businesses

The IMF headquarters building is in Washington D.C. Image: Flickr/pingnews

The International Monetary Fund has announced that it will try to boost its lending power to $1 trillion this November. The Group of 20 summit in South Korea will discuss this request. By increasing its ability to give emergency cash advance money to countries in trouble, the IMF hopes to improve their response to financial crisis.

Lending capacity of the IMF

The IMF currently has a lending capacity of about $750 billion. This money is most often lent in the form of advance loans to countries that are struggling. The money is usually used to help stabilize shaky financial systems, purchase infrastructure and undertake reforms. IMF loans are usually given to third and second world countries. Though they are technically able to take the money, many first-world countries are not taking the fast cash loan in order to avoid appearance of instability.

Increasing ability to lend

The IMF is governed and funded by a large consortium of countries. Many of these countries will be in attendance at the G-20 summit in South Korea in November. If the IMF is granted an additional $250 billion in lending power, these countries will be on the hook. While the IMF does not have a bank account with $750 billion sitting in it, the countries that make up the IMF are responsible for providing the money.

Limitations on IMF money

When the IMF provides a cash loan, it comes with several strings attached. Countries must undertake a number of reforms if they do take a loan from the IMF. The reforms are the basis of much controversy. Some claim that the fast loans given by the IMF end up doing more harm than good. If the IMF does increase lending capacity to $1 trillion, it will be able to provide more loans. The jury is out, though, on if this is a good thing for the world economy.

Understanding the important bond between money and children now will reap great results in the end. (Photo: Thinkstock)

“Money is what makes the world go ’round,” some say. To a great extent, this is a very true adage, one that has been known for many years. Money and children are the prime focus when looking for a ray of sunshine in the future. They are the adults of tomorrow, the ones who will be making the final decisions when our days are over. But how well will they manage? Can you affect the bond between money and children, and could it provide a better outlook for their financial futures?

Money and children – the earlier the better

Many adults these days are struggling through financial problems, big and small. The recent recession has proved that even the most responsible individuals can fall flat on their faces with a single blow. What about adults who were never taught the true value of money? Where are they now financially? Are they repeatedly stuck from one pay day to another? One thing’s for sure, without the proper understanding of money, financial disaster will be the only outcome. That’s why it’s absolutely crucial that you start teaching your children about money when they are still young.

Not only will they begin to develop strong saving habits, but they will also learn to make smart purchases and understand the true meaning of “investment.” As they advance into their adult lives, this “understanding” will slowly develop into a powerful instrument that will secure financial stability and help them achieve success in multiple of ways. Isn’t this something you want for your children’s future? If so, start teaching them about money now.

The man in the mirror

“Monkey see, monkey do” – that’s how children are, it’s true. Do not underestimate the brilliance of a child. Don’t forget that children will take into account how you manage money. They learn a lot just by watching you and your personal financial dealings: spending, withdrawing, cashing, saving, etc. So be a role model for your children and set a fine example. Pave the right path for them to follow and remember, always allow room for mistakes. Surely you’ve made a few of them yourself.

Creating a strong financial future

It doesn’t matter where you come from, rich or poor, the focal idea regarding money and children is still the same. How well you train your children about money is what will determine their financial futures. The time and effort you invest today in teaching your children about money will reap great results in the long run.