Law of Banking and Financial Institutions Benchmark - Assignment Example

Law of Banking and Financial s Benchmark Question Attributes of Real E Brokers Real e as an investment avenue is essential in the sense that it provides its operators with relatively consistent returns that are a hybrid of capital growth and income from the same. As such, the business has a coupon-paying bond component that defines the propensity of its value to fluctuate. Real estate agents are the professionals tasked with the understanding and management of the industry and are commonly known for the services that they offer in helping people to sell, buy or rent properties of various aspects (Levy & Hapgood, 2007). This is because they work with various property sellers and buyers by helping them to navigate the market scenarios experienced in the property markets. As such, the nature of their duties requires that they possess certain characteristics or attributes. Largely, the agents are required to portray attributes of independence, persuasion, problem-solving skills, and interpersonal skills. With regard to independence attribute, the real estate agents are expected to engage and manage their own schedules and times in ensuring that they hustle to get word out on the specific properties that they are promoting, as well as ensuring that they find the exact information that is required by their clients. By being persuasive, the agents, based on their skills should be able to convince clients to either buy or sell properties through them at the appropriate prices, so as to gain profit out of the dealings. Subsequently, they are expected to use persuasion to get the bets deals and to successfully close the deals. By possessing interpersonal skills, the real estate agents are anticipated to labor with their clients and customers on a face-to-face basis and at all times, they are required to portray proper manners and the level of handling of clients should be highly rated. This skill also goes hand in hand with the listening skills in which the agents are to apply towards the attainment of effective communication with the clients pleasantly and effectively. The problem-solving skills are meant to enable the agents to quickly and promptly find solutions to matters that might arise in their dealings with the clients at various times and levels. This skill also enables the real estate agent to act as a moderator and mediator between the buyers and sellers of the various real estate properties that are sanctioned under their guidance. In other contexts, real estate agents are required to possess attributes such as honesty and integrity, being self-motivated and having a desire to control their professional destiny in the manner rightly and morally required. They should also be proactive in the sense that they are able to keep their clients well informed of the various real estate property deals available in the market; being client motivated to always ensure that they have high regards for their clients, and granting them the top priority. Consequently, they should know the timeframe of their clients such that they are always required to be informed of the selling motivations of their clients. Through this, they shall be able to design and provide for property sale packages that are in line with the requirements of their clients. Additionally, this would enable them to know when exactly their customers are selling or buying so as to be able to present to them the right packages of properties at the appropriate times. Attributes of Finance Lenders Finance lenders are individuals or institutions who are legally tasked with the duty to provide financial assistance to borrowers in the form of loans depending on the various financial needs of such individuals. In California, the finance lenders are guided by laws that regulate their operations. However, for one to qualify as a finance lender, they are expected to possess attributes such as honesty, and transparency, accountability and integrity in handling cash to the clients. Subsequently, they should have good interpersonal skills that will permit them to participate with their clients in a formal and humane manner, especially when the borrowers default the payments for the money lent. In another context, the lenders should have good business management skills so that they are able to maintain proper cash flow records, ensure adequate development of the financial packages, and know how to efficiently manage clients in terms of disputes resolutions (Besley & Brigham, 2008). Finally, they should have good business planning skills, so that they are able to devise various means by which to keep their businesses running without failing to meet the obligations of clients. Types of licenses allowing these businesses in California In California, real estate agents and finance lenders are guided in their operations by laws such as the Finance Lenders Law. It is this law that provides them with means of operating and avenues for exemptions in various scenarios. The implementation of this Law should be within the constraints of California Financial Code. Question 2 Government sponsored enterprise (GSE) denotes a corporation for financial services that was created by the U.S government to facilitate and enhance the flow of credit to various sector in the economy; thus, making such sectors very efficient and transparent in their financial dealings. The GSE also aids in the reduction of risks to investors and several capital suppliers. As such, the GSE is primarily controlled by two main organs: the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mac). These two corporations (Freddie Mac and Fannie Mac) are principally tasked with the obligation of making certain that the desired effects of GSE on the public are met and adhered to. As such, the corporations aid in enhancing the availability of credit to targeted economic sectors, and also in ensuring that there is a reduction in the cost of accessing credit by those sectors. Therefore, the corporations primarily help in reducing and preventing the capital losses risks to investors. Question 3 a. Payday lenders: Are lenders who offer cash on a short term basis, in most cases unsecured. In organizations, these lenders are known in the form of payday advancers. These lenders have certain attributes such as being able to lend amounts in desired amounts, but at higher interest rates. As such, they gain their profits in the business by being able to excessively charge higher annual percentage rates for whatever amount required. Subsequently, these lenders are characterized by unsecured loans in which no collateral/security is required for one to access credit (Aquinas, 2010). b. Money transmitters: In California, these are licensed bodies tasked with the provision of payment instruments or money transfer services electronically, and governed by the Money Transmission Act. They are obligated to possess characteristics such as risk-taking, given the nature of the service of money transfer they provide. In certain instances, the security of money transfer is not assured; hence, the money transmitters have to absorb the loss. The service also requires a secure payment form; hence, shielding the money transmitter from fraud. In another aspect, they operate as a network of branches in the provision of the service; hence, are required to have good networked systems. Subsequently, these service providers are required to attain a minimum net worth as set by the government. c. Stored value cards: These are plastic cards that are in the sizes of credit cards, but with integrated circuits embedded in them to allow for the use of the card in storing a person’s information and enabling the performance of definite dealings when slotted in into special devices designed for reading and processing them. They are developed managed by the U.S Treasury, Bureau of Fiscal Services and the Federal Reserve Banks. These cards are defined by features such as being multi-layered, having an integrated chip circuitry to control access to funds, and enhanced security through the banks’ automated systems. Question 4 Importance of Glass-Steagall Act Glass-Steagall Act, is a U.S law that was enacted in 1933 during the period of Great Depression as a prohibition to commercial banks to not engage in speculative investment activities. In the Banking Act 1933, this Act is commonly referred to by the 16th, 20th, 21st, and 32nd sections. While it led to the collapse of several banks in that period, it can be attributed to the freedom that banks acquired of owning brokerage and mutual funds firms in which they could trade as both principals and agents of securities (Williams & American Bar Association, 2006). Therefore, the Act largely served in regulating banks from engaging in commercial speculations in the pre-Depression period; hence, impacting on the investment banking and on the role of banks towards investments (Carnell, Jonathan & Miller, 2011). Importance of the Gramm-Leach-Bliley Act This Act arose out of the limitations of the Glass-Steagall Act and served in defining the extent to which speculative restriction was healthy for the banking sector. References Aquinas, P. G. (2010). Organization structure and design: Applications and challenges. New Delhi: Excel Books. Besley, S., & Brigham, E. F. (2008). Principles of finance. Mason, Ohio: South-Western. Carnell, Richard Scott, Macey, Jonathan R., & Miller, Geoffrey P. (2011). Law of Banking and Financial Institutions Statutory Supplement with Recent Developments, 2011. Kluwer Law Intl. Levy, N., & Hapgood, M. (2007). Pagets law of banking. C, 973 S. Williams, H. C., & American Bar Association. (2006). Federal banking law and regulations: A handbook for lawyers. Chicago: American Bar Association. Read More