U.S. Financial Markets Struggle as Bank Worries Spread to Europe

By Stan Choe, Associated Press

Updated: Wednesday, March 15, 2023

NEW YORK — Stocks are back to falling on Wall Street Wednesday as worries worsen about the strength of banks on both sides of the Atlantic.

The S&P 500 was 1.5% lower in morning trading, while markets in Europe fell more sharply as shares of Switzerland’s Credit Suisse tumbled to a record low. The Dow Jones Industrial Average was down 482 points, or 1.5%, at 31,672 as of 10:15 a.m. Eastern time, while the Nasdaq composite was 1.2% lower.

Credit Suisse has been fighting troubles for years, including losses it took from the 2021 collapse of investment firm Archegos Capital. Its shares in Switzerland sank more than 22% following reports that its top shareholder won’t pump more money into its investment.

Wall Street’s harsh spotlight has intensified across the banking industry recently on worries about what may crack next following the second- and third-largest bank failures in U.S. history last week. Stocks of U.S. banks tumbled again Wednesday after enjoying a brief, one-day respite on Tuesday.

The heaviest losses were focused on smaller and mid-size banks, which are seen as more at risk of having customers try to pull their money out en masse. First Republic Bank sank 15.1%, a day after soaring 27%. KeyCorp fell 9%, and Huntington Bancshares dropped 7.3%

Larger banks weren’t hit as hard but still fell. JPMorgan Chase slid 3.8%.

Much of the damage is seen as the result of the Federal Reserve’s fastest barrage of hikes to interest rates in decades. The Fed has pulled its key overnight rate to a range of 4.50% to 4.75%, up from virtually zero at the start of last year, in hopes of driving down painfully high inflation.

Higher rates can tame inflation by slowing the economy, but they raise the risk of a recession later on. They also hurt prices for stocks, bonds and other investments. That latter factor was one of the issues hurting Silicon Valley Bank, which collapsed Friday, because high rates forced down the value of its bond investments.

The U.S. government announced a plan late Sunday to protect depositors at Silicon Valley Bank and Signature Bank, which regulators shut on Sunday, in hopes of shoring up confidence in the banking industry. But markets have since swung from fear to calm and back again.

Some of this week’s wildest action has been in the bond market, where traders are rushing to guess what all the chaos will mean for future Fed action. On one hand, stress in the financial system could push the Fed to hold off on hiking rates again at its meeting next week, or at least refrain from the larger rate hike it has been signaling.

On the other hand, inflation is still high. While taking it easier on interest rates could give more breathing space to banks and the economy, the fear is such a move by the Fed could also give inflation more oxygen.

Weaker-than-expected economic reports released Wednesday may have allayed some of those worries. One showed that inflation at the wholesale level slowed by much more last month than economists expected. It’s still high at a 4.6% level versus a year earlier, but that was better than the 5.4% that was forecast.

Other data showed that U.S. spending at retailers fell by more than expected last month, though spending in prior months was revised up. Manufacturing in New York state, meanwhile, is weakening by much more than forecast. Such data could raise worries about a recession on the horizon, but they may also take some pressure off inflation in the near term.

That caused the yield on the two-year Treasury to plummet. It tends to track expectations for the Fed, and it dropped to 3.87% from 4.25% late Tuesday. That’s a massive move for the bond market. The two-year yield was above 5% just a week ago, at its highest level since 2007.

The yield on the 10-year Treasury dropped to 3.45% from 3.69%. It helps set rates for mortgages and other important loans.

The weak economic data pushed traders to build bets that the Fed may end up holding rates steady next week. That’s a sharp turnaround from earlier this month, when the only options seemed to be another hike of 0.25 percentage points or an acceleration to 0.50 points.

In Europe, indexes tumbled on weakness from banks. France’s CAC 40 dropped 3.7%, and Germany’s DAX lost 3.1%. The FTSE 100 in London fell 3.2%.

They followed up on gains across much of Asia.

On Wall Street, companies in the oil and gas business also tumbled as the price of crude dropped more than 3%.

Halliburton fell 7.6%, and Schlumberger dropped 5.3%

https://www.adn.com/nation-world/2023/03/15/us-financial-markets-struggle-as-bank-worries-spread-to-europe/

 

Talking Concrete Could Help Prevent Traffic Jams and Cut Carbon Emissions

Interstates throughout U.S. consider an invention to reduce road repairs

From:  Purdue University

March 16, 2023 -- An increasing number of U.S. interstates are set to try out an invention that could save millions of taxpayer dollars and significantly reduce traffic delays. The invention, a sensor that allows concrete to 'talk,' decreases construction time and how often concrete pavement needs repairs while also improving the road’s sustainability and cutting its carbon footprint. Embedded directly into a concrete pour, the sensor sends engineers more precise and consistent data about the concrete’s strength and need for repair than is possible with currently used tools and methods.

The invention, a sensor that allows concrete to "talk," decreases construction time and how often concrete pavement needs repairs while also improving the road's sustainability and cutting its carbon footprint.

Embedded directly into a concrete pour, the sensor sends engineers more precise and consistent data about the concrete's strength and need for repair than is possible with currently used tools and methods.

"Traffic jams caused by infrastructure repairs have wasted 4 billion hours and 3 billion gallons of gas on a yearly basis. This is primarily due to insufficient knowledge and understanding of concrete's strength levels," said Luna Lu, the Reilly Professor and acting head of Purdue's Lyles School of Civil Engineering, who has been leading development of the sensors since 2017. "For instance, we don't know when concrete will reach the right strength needed to accommodate traffic loads just after construction. The concrete may go through premature failure, leading to frequent repairing."

According to data from the Federal Highway Administration, concrete pavement makes up less than 2% of U.S. roads but approximately 20% of the U.S. interstate system. Lu's research has focused on improving the conditions of concrete pavement first because it is the most challenging road material to repair. Concrete interstate pavement also must reliably support a large proportion of the nation's traffic.

More than half of U.S. states with concrete interstate pavement have signed up to participate in a Federal Highway Administration pooled fund study to implement the sensors. The participating states are Indiana, Missouri, North Dakota, Kansas, California, Texas, Tennessee, Colorado and Utah.

Additional states are expected to join as the study kicks off in the coming months. Two states -- Indiana and Texas -- have already begun trying out the sensors in highway paving projects.

The technology also is on track to hit the market later this year as the REBEL Concrete Strength Sensing System, a product of WaveLogix. Lu founded WaveLogix in 2021 to manufacture the technology on a larger scale. The company licenses the technology from the Purdue Research Foundation Office of Technology Commercialization, which has applied for patent protection on the intellectual property.

Fast Company magazine named this invention one of its Next Big Things in Tech for 2022, which recognizes projects already making an impact on a real-world problem while also showing promise to make a greater impact in the years to come. The American Society of Civil Engineers' 2021 Report Card for America's Infrastructure also selected the technology as one of its "Gamechangers" for the year. Other organizations, such as the American Association of State Highway and Transportation Officials, have followed the technology's developments since its initial introduction in 2019.

Replacing century-old industry standards to make roads last longer

The Purdue invention is gradually rising as a better alternative to tests that have been the industry's standard since the early 1900s.

Lu and her lab started developing the technology in 2017, when the Indiana Department of Transportation requested help in eliminating premature failure of newly repaired concrete pavement by more accurately determining when the pavement is ready to be opened to traffic.

After embedding an early prototype of the sensor into sections of various Indiana highways, INDOT added the sensor technology to its Indiana Test Methods Index. This index lists tests for contractors and construction workers to use to ensure road pavement quality.

Methods that the industry has used for more than a century call for testing large samples of concrete at a lab or onsite facility. Using that data, engineers estimate the strength level that a particular concrete mix will reach after it's been poured and left to mature at a construction site. Even though these tests are well understood by the industry, discrepancies between lab and outdoor conditions can lead to inaccurate estimates of the concrete's strength due to the different cement compositions and temperatures of the surrounding area.

With the technology Lu and her team invented, engineers no longer have to rely on concrete samples to estimate when fresh concrete is mature enough. Instead, they can directly monitor the fresh concrete and accurately measure many of its properties at once.

The sensor communicates to engineers via a smartphone app exactly when the pavement is strong enough to handle heavy traffic. The stronger the pavement is before being used by vehicles, the less often it will need to be repaired. The ability to instantly receive information about the concrete's strength levels also allows roads to open to traffic on time or sooner following a fresh pour.

Construction workers can install the sensors simply by tossing them onto the ground of the concrete formwork and covering them with concrete. Next, they plug the sensor cable into a reusable handheld device that automatically starts logging data. Using the app, workers can receive information on real-time changes in the concrete strength for as long as the strength data is required.

Cutting carbon emissions by cutting down on traffic and cement

By decreasing road repairs and construction timelines, this technology could reduce carbon dioxide that vehicles would have emitted while waiting in traffic to get around a construction site.

Lu's startup, WaveLogix, also is developing a way to curb carbon emissions by cutting the amount of cement needed in concrete mixes. The manufacturing of cement is responsible for 8% of the world's carbon footprint. WaveLogix has made progress on a solution that uses artificial intelligence to optimize the design of concrete mixes based on data that the sensors would collect from highways across the country.

Construction codes call for a higher cement content in concrete mixes to ensure that concrete sample testing meets required strength thresholds. Excess cement can lead to premature cracks in pavement. Based on these code requirements and data from the Global Cement and Concrete Association, Lu estimates that concrete mix overdesign causes more than 1 billion tons of carbon emissions per year.

"The biggest problem with concrete mixes is that we use more cement to increase the concrete's strength. That won't help open the road to traffic any sooner," Lu said.

These codes are based on how concrete mixes were made in the early 1900s, which was before equipment that could grind cement into finer powder was developed in the 1950s. Since concrete mixes use that finer powder today, they should have different water-cement ratios than a hundred years ago. The codes also don't take into consideration how weather in different states impacts a concrete mix. A concrete pour in the middle of Indiana's winter, for example, requires different concrete mixes to reach the right strength level than if the concrete were poured during California's winter.

Lu believes that this new method using artificial intelligence could potentially reduce by 20% to 25% the amount of the cement used in concrete mixes -- and simultaneously make pavement more durable and less expensive.

"I feel a strong sense of responsibility to make an impact on our infrastructure through developing new types of technology. In the field of civil engineering, if we don't make an impact on the world, there won't be a world to worry about," Lu said.

'Talking' concrete could help prevent traffic jams and cut carbon emissions: Interstates throughout U.S. consider an invention to reduce road repairs -- ScienceDaily 

Major Advance in Super-Resolution Fluorescence Microscopy

Pushing the MINFLUX technique to higher spatial and temporal precision allows protein dynamics to be observed under physiological conditions

From:  Max Planck Institute for Medical Research in Heidelberg

March 9, 2023 -- Scientists led by Nobel Laureate Stefan Hell at the Max Planck Institute for Medical Research in Heidelberg have developed a super-resolution microscope with a spatio-temporal precision of one nanometer per millisecond. An improved version of their recently introduced MINFLUX super-resolution microscopy allowed tiny movements of single proteins to be observed at an unprecedented level of detail: the stepping motion of the motor protein kinesin-1 as it walks along microtubules while consuming ATP. The work highlights the power of MINFLUX as a revolutionary new tool for observing nanometer-sized conformational changes in proteins.

Unraveling the inner workings of a cell requires knowledge of the biochemistry of individual proteins. Measuring tiny changes in their position and shape is the central challenge here. Fluorescence microscopy, in particular super-resolution microscopy (i.e. nanoscopy) has become indispensable in this emerging field. MINFLUX, the recently introduced fluorescence nanoscopy system, has already attained a spatial resolution of one to a few nanometers: the size of small organic molecules. But taking our understanding of molecular cell physiology to the next level requires observations at even higher spatio-temporal resolution.

When Stefan Hell’s group first presented MINFLUX in 2016, it had been used to track fluorescently labeled proteins in cells. However, these movements were random, and the tracking had precisions of the order of tens of nanometers. Their study is the first to apply the resolving power of MINFLUX to conformational changes of proteins, specifically the motor protein kinesin-1. To do this, the researchers at the Max Planck Institute for Medical Research developed a new MINFLUX version for tracking single fluorescent molecules.

All established methods for measuring protein dynamics have severe limitations, hampering their ability to address the critically important (sub)nanometer / (sub)millisecond range. Some provide a high spatial resolution, down to a few nanometers, but cannot track changes fast enough. Others have a high temporal resolution but require labeling with beads that are 2 to 3 orders of magnitude larger than the protein being studied. Since the functioning of the protein is likely to be compromised by a bead of this size, studies using beads leave open questions.

Fluorescence from a single molecule

MINFLUX, however, requires only a standard 1-nm sized fluorescence molecule as a label attached to the protein, and therefore can provide both the resolution and the minimal invasiveness that are needed in studying native protein dynamics. “One challenge lies in building a MINFLUX microscope that works close to the theoretical limit and is shielded against environmental noise”, says Otto Wolff, PhD student in the group. “Designing probes that do not affect the protein function, but still reveal the biological mechanism, is another”, adds his colleague Lukas Scheiderer.

The MINFLUX microscope which the researchers now introduce can record protein movements with a spatiotemporal precision of up to 1.7 nanometers per millisecond. It requires the detection of only about 20 photons emitted by the fluorescent molecule. “I think we are opening a new chapter in the study of the dynamics of individual proteins and how they change shape during their functioning”, says Stefan Hell. “The combination of high spatial and temporal resolution provided by MINFLUX will allow researchers to study biomolecules as never before.”

Resolving the  stepping motion of kinesin-1 with ATP under physiological conditions

Kinesin-1 is a key player in transporting cargo throughout our cells, and mutations of the protein are at the heart of several diseases. Kinesin-1 actually ‘walks’ along filaments (the microtubules) that span our cells like a network of streets. One can imagine the motion as literally ’stepping‘, since the protein has two ‘heads’ that alternately change their location on the microtubule. This movement occurs usually along one of the 13 protofilaments forming the microtubule, and is fueled by splitting of the cell’s principal energy supplier ATP (adenosine triphosphate).

Using only a single fluorophore for labeling the kinesin-1, the scientists recorded the regular 16 nm. steps of individual heads as well as 8 nm substeps, with  nanometer/millisecond spatiotemporal resolution. Their results proved that ATP is taken up while a single head is bound to the microtubule, but that ATP hydrolysis occurs when both heads are bound. It also revealed that the stepping involves a rotation of the protein ‘stalk’, the part of the kinesin molecule that holds the cargo. The spatiotemporal resolution of MINFLUX also revealed a rotation of the head in the initial phase of each step. Significantly, these findings were made using physiological concentrations of ATP, as was hitherto not possible with tiny fluorescence labels.

Future potential in exploring protein dynamics

 “I’m excited so see where MINFLUX will take us. It adds another dimension to the study of how proteins work. This can help us to understand the mechanisms behind many diseases and ultimately contribute to the development of therapies”, adds Jessica Matthias, a postdoctoral scientist formerly in Hell’s group who is now exploring the applications of MINFLUX to a variety of biological questions.

https://www.mpg.de/19988355/0309-mefo-fast-even-at-the-nanometer-level-153070-x

  

Complex Learned Social Behavior Discovered in Bee's Waggle Dance

Researchers find that learning and culture are needed for one of the most intricate forms of communication known outside humans

From:  University of California - San Diego

March 9, 2023 -- Researchers have discovered early social learning in insects. They found signaling communicated by honey bees about food sources -- transmitted through a 'waggle dance' -- is an intricate form of social learning and one of the most complex known examples of non-human spatial referential communication.

Passing down shared knowledge from one generation to the next is a hallmark of culture and allows animals to rapidly adapt to a changing environment.

While widely evident in species ranging from human infants to naked mole rats or fledgling songbirds, early social learning has now been documented in insects.

Publishing in the journal Science, a University of California San Diego researcher and his colleagues uncovered evidence that social learning is fundamental for honey bees. Professor James Nieh of the School of Biological Sciences and his collaborators discovered that the "waggle dance," which signals the location of critical resources to nestmates through an intricate series of motions, is improved by learning and can be culturally transmitted. The study demonstrates the importance of early social signal learning in one of the most complex known examples of non-human spatial referential communication.

"We are beginning to understand that, like us, animals can pass down information important for their survival through communities and families. Our new research shows that we can now extend such social learning to include insects," said Nieh, a professor in the Department of Ecology, Behavior and Evolution.

A social insect with a highly organized community structure, honey bees help ensure the survival of their colonies by communicating the location of food sources to one another through a waggle dance in which bees circle around in figure-eight patterns while waggling their bodies during the central part of the dance. Performed at breakneck speed (each bee moves a body length in less than one second), the motions within the dance translate visual information from the environment around the hive and the location of the sun into the distance, direction and even the quality of the resource to nestmates. Transmitting this information accurately is a remarkable feat because bees must move rapidly across an often uneven honeycomb hive surface.

Nieh and fellow researchers Shihao Dong, Tao Lin and Ken Tan of the Chinese Academy of Sciences (CAS) set up experiments testing the details involved in waggle dance communication. They created colonies to study the information transmission process between skilled forager bees and their younger, less experienced nestmates.

The experimenters created colonies in which bees were never able to observe or follow waggle dancers before they first danced. These colonies consisted of young bees that were all the same age. Bees begin to dance when they reach the right age and always follow experienced dancers before they first attempt to dance. In these experimental colonies, bees were therefore never able to learn from more experienced dancers.

"Bees without the opportunity to follow any dancers before they first danced produced significantly more disordered dances with larger waggle angle divergence errors and encoded distance incorrectly," the researchers noted in the paper.

In contrast, bees that shadowed other dances in control colonies did not suffer from such problems. Like humans, for which early exposure to language development is essential, the bees acquired social cues that were encoded and stayed with them for life (about 38 days). Those that did not learn the correct waggle dance early on were able to improve by subsequently watching other dancers and by practicing, but they were never able to correctly encode distance. This distance encoding creates the distinct "dialects" of different honey bee species. In other words, the bees that could never observe other dancers during their critical early stage of learning developed a new dialect that they maintained for the rest of their lives.

"Scientists believe that bee dialects are shaped by their local environments. If so, it makes sense for a colony to pass on a dialect that is well adapted to this environment," said Nieh. The results therefore provided evidence that social learning shapes honey bee signaling as it does with early communication in many vertebrate species that also benefit from learning.

With their new results, Nieh and his colleagues now would like to understand the role of the environment in shaping bee language. In the future, they would like to find out if older, more experienced bees in the colony that know the distribution of food sources within their environment might be able to pass on an optimized dialect to the next generation.

They are also concerned that external threats could disrupt this early language learning. Multiple studies, including those by Nieh and his collaborators, demonstrated the harm that commonly used pesticides can inflict on bees.

"We know that bees are quite intelligent and have the capacity to do remarkable things," said Nieh. "Multiple papers and studies have shown that pesticides can harm honey bee cognition and learning, and therefore pesticides might harm their ability to learn how to communicate and potentially even reshape how this communication is transmitted to the next generation of bees in a colony."

Video: https://youtu.be/8EAZvnjfnac

        https://www.sciencedaily.com/releases/2023/03/230309164713.htm

 

Experiment Unlocks Bizarre Properties of Strange Metals

International team finds unusual electrical behavior in material that holds promise for new technology

From:  University of Cincinnati

March 13, 2023 -- Physicists are learning more about the bizarre behavior of 'strange metals,' which operate outside the normal rules of electricity.

Theoretical physicist Yashar Komijani, an assistant professor at the University of Cincinnati, contributed to an international experiment using a strange metal made from an alloy of ytterbium, a rare earth metal. Physicists in a lab in Hyogo, Japan, fired radioactive gamma rays at the strange metal to observe its unusual electrical behavior.

Led by Hisao Kobayashi with the University of Hyogo and RIKEN, the study was published in the journal Science. The experiment revealed unusual fluctuations in the strange metal's electrical charge.

"The idea is that in a metal, you have a sea of electrons moving in the background on a lattice of ions," Komijani said. "But a marvelous thing happens with quantum mechanics. You can forget about the complications of the lattice of ions. Instead, they behave as if they are in a vacuum."

Komijani for years has been exploring the mysteries of strange metals in relation to quantum mechanics.

"You can put something in a black box and I can tell you a lot about what's inside it without even looking at it just by measuring things like resistivity, heat capacity and conductivity," he said.

"But when it comes to strange metals, I have no idea why they are showing the behavior they do. The mystery is what is happening inside this strange system. That is the question."

Strange metals are of interest to a wide range of physicists studying everything from particle physics to quantum mechanics. One reason is because of their oddly high conductivity, at least under extremely cold temperatures, which gives them potential as superconductors for quantum computing.

"The thing that is really exciting about these new results is that they provide a new insight into the inner machinery of the strange metal," said study co-author Piers Coleman, a distinguished professor at Rutgers University.

"These metals provide the canvas for new forms of electronic matter -- especially exotic and high temperature superconductivity," he said.

Coleman said it's too soon to speculate about what new technologies strange metals might inspire.

"It is said that after Michael Faraday discovered electromagnetism, the British Chancellor William Gladstone asked what it would be good for," Coleman said. "Faraday answered that while he didn't know, he was sure that one day the government would tax it."

Faraday's discoveries opened a world of innovation.

"We feel a bit the same about the strange metal," Coleman said. "Metals play such a central role today -- copper, the archetypal conventional metal, is in all devices, all power lines, all around us."

Coleman said strange metals one day could be just as ubiquitous in our technology.

The Japan experiment was groundbreaking in part because of the way that researchers created the gamma particles using a particle accelerator called a synchrotron.

"In Japan, they use a synchrotron like they have at CERN [the European Organization for Nuclear Research] that accelerates a proton and smashes it into a wall and it emits a gamma ray," Komijani said. "So they have an on-demand source of gamma rays without using radioactive material."

Researchers used spectroscopy to study the effects of gamma rays on the strange metal.

Researchers also examined the speed of the metal's electrical charge fluctuations, which take just a nanosecond -- a billionth of a second. That might seem incredibly fast, Komijani said.

"However, in the quantum world, a nanosecond is an eternity," he said. "For a long time we have been wondering why these fluctuations are actually so slow. We came up with a theory with collaborators that there might be vibrations of the lattice and indeed that was the case."

The study was funded in part by the National Science Foundation and the Department of Energy.

        https://www.sciencedaily.com/releases/2023/03/230313084546.htm

  

Dodd-Frank Act: What It Does, Major Components, Criticisms

 

• LAWS & REGULATIONS  
• INVESTING LAWS

By ADAM HAYES

 Updated September 08, 2022

Reviewed by 

THOMAS BROCK

Fact checked by 

KATRINA MUNICHIELLO

What Is the Dodd-Frank Wall Street Reform and Consumer Protection Act?

The Dodd-Frank Wall Street Reform and Consumer Protection Act is legislation that was passed by the U.S. Congress in response to financial industry behavior that led to financial crisis of 2007–2008. It sought to make the U.S. financial system safer for consumers and taxpayers.

Named for sponsors Sen. Christopher J. Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.), the act contains numerous provisions, spelled out over 848 pages, that were to be implemented over a period of several years.1

KEY TAKEAWAYS

• The Dodd-Frank Act targeted financial system sectors that were believed to have caused the 2007–2008 financial crisis.
• Leading up to 2007, lax regulations led to extremely risky lending practices, which caused a housing sector bubble that ultimately burst and drove the global crisis, the need for public bailouts of financial institutions, and recession.
• Those institutions seen as responsible included banks, insurance companies, investment banking firms, mortgage lenders, and credit rating agencies.
• Critics of the law argue that the regulatory burdens it imposes could make U.S. firms less competitive than their foreign counterparts.2
• In 2018, Congress passed a new law that rolled back some of Dodd-Frank’s restrictions.3

Understanding the Dodd-Frank Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act is a massive piece of financial reform legislation that was passed in 2010, during the Obama administration.

Commonly known as the Dodd-Frank Act, or Dodd-Frank, it established a number of new government agencies tasked with overseeing the various components of the law and, by extension, various aspects of the financial system.

The 2007-2008 financial crisis is perhaps the worst economic catastrophe to befall the country (and world) since the Wall Street crash in 1929. Broadly speaking, it was caused by the greed-driven behavior and lax oversight of financial institutions.

The loosening of financial industry regulations in the decades leading up to 2007 allowed various types of institutions in the U.S. financial services industry to lend money in ways that were riskier than ever before. The housing sector in particular experienced massive growth that couldn't be supported.

The bubble burst, sending the banking industry and global stock markets into a downfall. It created the worst global recession in generations.

Dodd-Frank was created to keep anything similar from ever happening again.

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act was intended to prevent another financial crisis like the one in 2007–2008.

Components of the Dodd-Frank Act

Here are some of the law’s key provisions and how they work:

• Financial Stability: Under the Dodd-Frank Act, the Financial Stability Oversight Council and the Orderly Liquidation Authority monitor the financial stability of major financial firms. The failure of these companies (deemed too big to fail) could have a serious negative impact on the U.S. economy. The law also provides for liquidations or restructurings via the Orderly Liquidation Fund. This fund was established to assist with the dismantling of financial companies that have been placed in receivership to prevent tax dollars from being used to prop up such firms. The council has the authority to break up banks that are considered so large as to pose systemic risk. It can also force banks to increase their reserve requirements.1 Similarly, the new Federal Insurance Office was tasked with identifying and monitoring insurance companies also felt to be too big to fail.4
• Consumer Financial Protection Bureau: The Consumer Financial Protection Bureau (CFPB), established under Dodd-Frank, was given the job of preventing predatory mortgage lending and helping consumers to understand the terms of a mortgage before agreeing to it. This reflected the widespread sentiment that the subprime mortgage market was the underlying cause of the 2007–2008 catastrophe. The CFPB deters mortgage brokers from earning higher commissions for closing loans with higher fees and/or higher interest rates. It requires that mortgage originators not steer potential borrowers to the loan that will result in the highest payment for the originator.5 The CFPB also governs other types of consumer lending, including credit and debit cards, and addresses consumer complaints. It requires lenders, excluding automobile lenders, to disclose information in a form that is easy for consumers to read and understand. Such an example is the simplified terms now on credit card applications.6
• Volcker Rule: The Volcker Rule restricts how banks can invest, limits speculative trading, and eliminates proprietary trading. Banks are not allowed to be involved with hedge funds or private equity firms, which are considered too risky. To minimize possible conflicts of interest, financial firms are not allowed to trade proprietarily without sufficient "skin in the game.”7 The Volcker Rule is clearly a push back in the direction of the Glass-Steagall Act of 1933, which first recognized the inherent dangers of financial entities extending commercial and investment banking services at the same time.8 The act also contains a provision for regulating derivatives, such as the credit default swaps that were widely blamed for contributing to the 2007–2008 financial crisis. Dodd-Frank set up centralized exchanges for swaps trading to reduce the possibility of counterparty default. It required greater disclosure of swaps trading information to increase transparency in those markets.1 The Volcker Rule also regulates financial firms’ use of derivatives in an attempt to prevent “too big to fail” institutions from taking large risks that might wreak havoc on the broader economy.7
• Securities and Exchange Commission (SEC) Office of Credit Ratings: Dodd-Frank established the SEC Office of Credit Ratings because credit rating agencies had been accused of giving out misleadingly favorable investment ratings in the lead up to the financial crisis. The office is charged with ensuring that agencies provide meaningful and reliable credit ratings of the businesses, municipalities, and other entities that they evaluate.9
• Whistleblower Program: Dodd-Frank also strengthened and expanded the existing whistleblower program promulgated by the Sarbanes-Oxley Act (SOX) of 2002. Specifically, it established a mandatory bounty program under which whistleblowers can receive from 10% to 30% of the proceeds from a litigation settlement; broadened the scope of a covered employee by including employees of a company’s subsidiaries and affiliates; and extended the statute of limitations under which whistleblowers can bring forward a claim against their employer from 90 to 180 days after a violation is discovered.10

The Economic Growth, Regulatory Relief, and Consumer Protection Act

When Donald Trump was elected president in 2016, he pledged to repeal Dodd-Frank. Siding with critics, the U.S. Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act, which rolled back significant portions of the Dodd-Frank Act.

It was signed into law by then-President Trump on May 24, 2018.3 These are some of the provisions of that law, and some of the areas in which previous standards were loosened:

• The new law eased the Dodd-Frank regulations for small and regional banks by increasing the asset threshold for the application of prudential standards, stress test requirements, and mandatory risk committees.3
• For institutions that have custody of clients’ assets but do not function as lenders or traditional bankers, the new law provided for lower capital requirements and leverage ratios.3
• The new law exempted escrow requirements for residential mortgage loans held by a depository institution or credit union under certain conditions. It also directed the Federal Housing Finance Agency (FHFA) to set up standards for Freddie Mac and Fannie Mae to consider alternative credit scoring methods.3
• The law exempted lenders with assets of less than $10 billion from requirements of the Volcker Rule and imposed less stringent reporting and capital norms on small lenders.3
• The law required that the three major credit reporting agencies allow consumers to freeze their credit files free of charge as a way of deterring fraud.3

After Joseph Biden was elected president in 2020, the CFPB focused on rescinding rules from the Trump era that were in direct conflict with the charter of the CFPB.

In June 2021, President Biden, along with the U.S. Department of Education and support from the CFPB, canceled more than $500 million of student loan debt. The CFPB has strengthened its oversight of for-profit colleges to tamp down on predatory student loan practices.

The Biden administration has also announced its intent to reestablish rules against other predatory lending, such as payday loans. Additionally, subprime auto loan practices will be addressed by the CFPB.

Criticism of the Dodd-Frank Act

Proponents of Dodd-Frank believed that the law would prevent the economy from experiencing a crisis like that of 2007–2008 and protect consumers from many of the abuses that contributed to the crisis.

Detractors, however, have argued that the law could harm the competitiveness of U.S. firms relative to their foreign counterparts. In particular, they contend that its regulatory compliance requirements unduly burden community banks and smaller financial institutions, despite the fact that they played no role in causing the financial crisis.2

Such financial world notables as former Treasury Secretary Larry Summers, Blackstone Group L.P. (BX) CEO Stephen Schwarzman, activist Carl Icahn, and JPMorgan Chase & Co. (JPM) CEO Jamie Dimon also argue that, while each institution is undoubtedly safer due to the capital constraints imposed by Dodd-Frank, the constraints make for a more illiquid market overall.1112

The lack of liquidity can be especially potent in the bond market, where all securities are not marked to market and many bonds lack a constant supply of buyers and sellers. The higher reserve requirements under Dodd-Frank mean that banks must keep a higher percentage of their assets in cash. This decreases the amount that they are able to hold in marketable securities.1

In effect, this limits the bond market-making role that banks have traditionally undertaken. With banks unable to play the part of a market maker, prospective buyers are likely to have a harder time finding counteracting sellers. More importantly, prospective sellers may find it more difficult to find counteracting buyers.

What Was the Purpose of the Dodd-Frank Act?

Dodd-Frank was intended to curb the extremely risky financial industry activities that led to financial crisis of 2007–2008. Its goal was, and still is, to protect consumers and taxpayers from egregious behavior such as predatory lending.

Is the Dodd-Frank Act Still in Effect?

Yes, it is. However, its regulatory strength was diluted with the passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act in 2018. Still, certain aspects, such as the bank stress tests it called for, are in use today. The Federal Reserve publishes stress test results regularly.13

What Are Some Criticisms of the Dodd-Frank Act?

Detractors of the Dodd-Frank Act have argued that the law could harm the competitiveness of U.S. firms relative to their foreign counterparts. In particular, critics contend that its regulatory compliance requirements unduly burden community banks and smaller financial institutions—despite the fact that they played no role in causing the financial crisis.2 Several financial world notables argued that, while each institution is undoubtedly safer due to the capital constraints imposed by Dodd-Frank, the constraints also make for a more illiquid market overall.1112

Could the Dodd-Frank Act Affect the Bond Market?

The potential lack of liquidity due to the higher reserve requirements under Dodd-Frank means that banks must keep a higher percentage of their assets in cash. This decreases the amount that they are able to hold in marketable securities. In effect, this limits the bond market-making role that banks have traditionally undertaken. With banks unable to play the part of market maker, prospective buyers are likely to have a harder time finding counteracting sellers. More importantly, prospective sellers may find it more difficult to find counteracting buyers.

The Bottom Line

The Dodd-Frank Act, enacted in 2010, was a direct response to the financial crisis of 2007–2008 and the ensuing government bailouts under the Troubled Asset Relief Program (TARP).

This law established a wide range of reforms throughout the entire financial system, with the purpose of preventing a repeat of the 2007–2008 crisis and the need for further government bailouts. The Dodd-Frank Act also included additional protections for consumers.

Although the Trump administration reversed and weakened several aspects of the Dodd-Frank Act, particularly those affecting consumers, the Biden administration intends to reestablish and strengthen the previous reversals to protect individuals who may be subject to predatory lending practices in industries such as for-profit education and automobiles.

Dodd-Frank Act: What It Does, Major Components, Criticisms (investopedia.com)

Surprising Similarities in Stone Tools of Early Humans and Monkeys

Accidentally produced stone fragments made by macaques resemble some of the earliest hominin stone artifacts

From:  Max Planck Institute for Evolutionary Anthropology

March 10, 2023 -- Researchers from the Max Planck Institute for Evolutionary Anthropology have discovered artefacts produced by old world monkeys in Thailand that resemble stone tools, which historically have been identified as intentionally made by early hominins. Until now, sharp-edged stone tools were thought to represent the onset of intentional stone tool production, one of the defining and unique characteristics of hominin evolution. This new study challenges long held beliefs about the origins of intentional tool production in our own lineage.

The research is based on new analyses of stone tools used by long-tailed macaques in the Phang Nga National Park in Thailand. These monkeys use stone tools to crack open hard-shelled nuts. In that process, the monkeys often break their hammerstones and anvils. The resulting assemblage of broken stones is substantial and widespread across the landscape. Moreover, many of these artefacts bear all of the same characteristics that are commonly used to identify intentionally made stone tools in some of the earliest archaeological sites in East Africa.

"The ability to intentionally make sharp stone flakes is seen as a crucial point in the evolution of hominins, and understanding how and when this occurred is a huge question that is typically investigated through the study of past artefacts and fossils. Our study shows that stone tool production is not unique to humans and our ancestors," says lead author Tomos Proffitt, a researcher at the Max Planck Institute for Evolutionary Anthropology. "The fact that these macaques use stone tools to process nuts is not surprising, as they also use tools to gain access to various shellfish as well. What is interesting is that, in doing so they accidently produce a substantial archaeological record of their own that is partly indistinguishable from some hominin artefacts."

New insights into the evolution of stone tool technology

By comparing the accidentally produced stone fragments made by the macaques with those from some of the earliest archaeological sites, the researchers were able to show that many of the artefacts produced by monkeys fall within the range of those commonly associated with early hominins. Co-lead author Jonathan Reeves highlights: "The fact that these artifacts can be produced through nut cracking has implications for the range of behaviours we associate with sharp edged flakes in the archaeological record.."

The newly discovered macaque stone tools offer new insights into how the first technology might have started in our earliest ancestors and that its origin may have been linked to similar nut cracking behaviour which could be substantially older than the current earliest archaeological record. "Cracking nuts using stone hammers and anvils, similar to what some primates do today, has been suggested by some as a possible precursor to intentional stone tool production. This study, along with previous ones published by our group, opens the door to being able to identify such an archaeological signature in the future," says Lydia Luncz, senior author of the study and head of the Technological Primates Research Group at the Max Planck Institute for Evolutionary Anthropology. "This discovery shows how living primates can help researchers investigate the origin and evolution of tool use in our own lineage."

           https://www.sciencedaily.com/releases/2023/03/230310143653.htm