Prepare an evidence-based business report (3-5 pages) that explains how relevant regulatory considerations impact a bank’s business strategy and supplies recommendations for navigating the current regulatory environment.
Introduction
This assessment will give you the opportunity to serve as economic adviser to a bank seeking recommendations for navigating the current regulatory environment.
Banks face a number of costly mandatory regulations. For example, banks need to make sure they are in compliance with the Dodd-Frank Act and Basel III. In December 2011, the U.S. Federal Reserve announced that it would implement most of the Basel III rules. Under Basel III, banks need to meet certain leverage ratios and maintain minimum capital requirements. Specially, under Basel III compared to under Basel I and Basel II, the Common Equity Tier 1 capital ratio increased from 4 percent to 4.5 percent, and the minimum Tier 1 capital jumped from 4 percent to 6 percent. The overall regulatory capital did not change at 8 percent. The leverage ratio (which is calculated as Tier 1 capital divided by the total of on- and off-balance assets minus intangible assets) can be no more than 3 percent. Under the Dodd-Frank Act, banks are required to conduct annual financial stress tests. The Sarbanes-Oxley Act is of particular interest to publicly traded banks.
Scenario
You are an economic analyst specializing in banking regulations at a consulting firm that advises a variety of client organizations, including investment firms, commercial banks, and policy advocates. Your immediate supervisor has approached you with two potential clients who need help understanding and navigating current regulatory considerations. Choose only one (not both) of the following clients to advise:
- Midwest Global Investments Bank is currently private but interested in going public. They want to know the challenges posed by the current regulatory environment and recommendations for how to navigate them.
- American Central Bank would like to change the capital requirements they are required to maintain. They want to know the challenges posed by the current regulatory environment and recommendations for how to navigate them.
Your Role
You are an economic analyst specializing in banking regulations at a consulting firm that advises a variety of client organizations, including investment firms, commercial banks, and policy advocates.
Requirements
Address the following in an evidence-based business report for the client bank you selected above:
- Analyze the impact of the Dodd-Frank Act, the Sarbanes-Oxley Act, and similar federal policies on the current regulatory environment.
- Discuss conflicting evidence and/or multiple perspectives to provide richer context.
- Analyze the economic implications of operating in a specific banking sector, such as commercial banking, investment banking, or others.
- Explain the pros and cons of the economic implications for your client bank.
- Explain how regulatory considerations impact a specific banking sector, such as commercial banking, investment banking, or others.
- Explain the pros and cons of these regulatory considerations for different stakeholders.
- Explain how legal, accounting, and other administrative costs that address regulation might impact a firm’s business strategy.
- Explain how the bank’s business strategy may be evaluated and adjusted in the future.
Deliverable Format
Since you are preparing this report for a valuable new client, you want this report to be clear, well-organized, and readable. Your supervisor has requested that your report be 3–5 pages so you have enough space to develop your ideas and provide some scholarly context for the client. Your report is a professional document and should therefore follow the corresponding MBA Academic and Professional Document Guidelines (located in the MBA Program Resources), including single-spaced paragraphs.
- Communication: Communicate in a manner that is scholarly, professional, and consistent with the needs and expectations of your client and other professional stakeholders. For this scenario, assume your consulting firm has promised original work, critical thinking, and scholarly sources. Your writing must be free of errors that detract from the overall message. Include an introduction, body, and conclusion.
- Resources: Include at least three resources that are scholarly and/or professional. So your bank client and other stakeholders can locate more information about banking regulations, include a reference page at the end of your report.
- Report length: Minimum of 3–5 pages, in addition to a reference page.
- Font and font size: Times New Roman, 12 point.
Faculty will use the scoring guide to review your deliverable as if they were both your immediate supervisor and your client in the scenario. Review the scoring guide prior to developing and submitting your assessment.
Evaluation
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies through corresponding scoring guide criteria:
- Competency 1: Analyze the economic environment and the role of the federal government in establishing fiscal and monetary policies.
- Analyze the impact of the Dodd-Frank Act, the Sarbanes-Oxley Act, and similar federal policies on the current regulatory environment.
- Competency 2: Analyze the impact of macroeconomic principles, theories, policies, and tools in on business and financial decision making.
- Analyze the economic implications of operating in a specific banking sector, such as commercial banking, investment banking, or others.
- Competency 3: Evaluate the role of ethics and regulatory considerations on financial and business decision making in organizations.
- Explain how regulatory considerations impact a specific banking sector, such as commercial banking, investment banking, or others.
- Competency 4: Analyze how microeconomic principles impact the approach and processes by which individuals and businesses make financial decisions.
- Explain how legal, accounting, and other administrative costs that address regulation might impact a firm’s business strategy.
- Competency 5: Communicate in a manner that is professional and consistent with expectations for members of the business professions.
- Communicate in a manner that is professional and consistent with expectations for members of the business professions.
