The Constitution Essay Example | Topics and Well Written Essays - 250 words

The Constitution - Essay Example On this note, Attorney General Janet Reno requested the Supreme Court to review the decision on Fourth Circuit in Reno v. Condon. (Axelrod 158). According to Axelrod, Condon claimed that the act implicated states sovereignty which granted the state all the powers even those not specified in the constitution (211). Condon also claimed that enforcement of the act would be enjoying the nation and its administrators. He therefore concluded the act to be contrary to the federalism principles of power delegation, between states and federal government as stated in the constitution. Reno court on the other hand found Driver’s Privacy Protection Act to be a general law of applicability. Generally applicable laws are laws that apply to both the state and private companies. Reno court concluded that, it was constitutional for the congress to regulate the states’ activities where a generally applicable law was involved. If initially Condon had successfully won in Reno v. Condon, there would be both social and political repercussions. Socially, crime levels would increase in the society in case information such as home address or social security number falls in the wrong hands. For example, a woman whose data had been disclosed by the state to another state but ended in hand of a stalker was murdered. Exposure of personal details would also result to segregation among the individuals on the bases of financial level, race or even education levels. Politically, the politicians may use the information for their own advantage by identifying the weakness of the states at individual level eventually leading to manipulation. The other state may with time have enough data from the subject state to investigate the economic power of the state and end up taking advantage of the situation (Axelrod 245) Likewise, the Supreme Court ruled that Driver’s Privacy Protection Act was constitutional and it did not violate federalism principles under the

Banking Regulation and Risks Coursework Example | Topics and Well Written Essays - 750 words

Banking Regulation and Risks - Coursework Example One of the reasons for increased leverage generating value for banks is that increased leverage increases the savings from cost of capital obtained from debt funds due to the tax code and subsidized government guarantees. ROE= Net Income/Shareholders Equity ROE can be decomposed to classify the financial drivers of value creation in a company. This is known as DuPont analysis. ROE= Return on assets*leverage Or, ROE= (Net Income/assets)*(assets/shareholders equity) Or, ROE= (Net Income/Revenue)*(Revenue/assets)*(Assets/Shareholders’ Equity) Or, ROE= Net Profit Margin*Asset Turnover*Leverage Thus the three components of ROE is net profit margin, asset turnover ratio and gearing ratio or leverage. The profit margin states the amount of profit made by a bank from its operations. The asset turnover ratio states that how efficient a bank is in using the assets it owns and determines the revenue generated by the bank from its assets. Asset turnover ratio has an inverse relationship w ith net profit margin. The gearing ratio measures the financial leverage and states that how the bank finances the assets it holds, i.e. the amount of assets per pound of shareholders’ equity investment in the bank. Assets are financed by shareholders’ equity and by creditors, and a higher ratio indicates that the bank is getting more finance from the creditors. Thus greater gearing ratio leads to rise in ROE. Illustration: Consider the following data- Revenue= ?29,261millions Net Income= ?4,212millions Assets= ?27,987millions Shareholders’ Equity= ?13,572millions Net profit margin= Net Income/Revenue= ?4,212millions/?29,261millions= 0.1439=14.39% Asset Turnover= Revenue/Assets= ?29,261millions/?27,987millions=1.0455 Leverage=Assets/Shareholders’ equity= ?27,987millions/?13,572millions= 2.0621 ROE= 0.1439*1.0455*2.0621= 0.3102 = 31.02% ROE of 31.02% to a bank is a good indicator of growth. Still, if a bank decides to not to take leverage so as to become d ebt-free, then the ROE drop to 15.04%. Even if a bank decides to assume less leverage than the current, ROE will decrease. Thus, from the above illustration it can be said that ROE can be improved through leverage, i.e. leverage is important for the rise and improvement of ROE. Answer 2. Northern Rock, the UK Bank was the most high-profile casualty of the credit crisis of 2007, as in September 2007 the bank suffered run from its depositors. Northern Rock Building Society, a British Bank was formed in 1997 when the society floated on the London Stock Exchange. The bank specialized in mortgage business, and 90% of the assets of the bank were residential mortgages. Rise in growth, profitability and market value was noticed in the bank’s performance since 2001. The shareholders of the bank were benefitted and the management informed that the business model of the bank was effective in bringing about cost control, high quality asset growth, and competitive products with innovative products and transparency. The following graph summarizes the key growth rates for the years 2001-2006. Source: suerf.org, 2009. The huge gap between risk-weighted assets and total assets made by the extensive regulatory arbitrage raised questions in respect to the quality of assets held by the bank. Due to the aggressive policy of Northern Rock, the bank ended up with a leverage to be the highest in the European sector but the capital that was to serve as a cushion against