One of the reason led to financial crisis because most of the commercial and investment banks had been deregulated started on 1980. The Glass-Steagall Act was repealed in 1999 for split up the powers of commercial and investment banking to ensure that banks cannot take risk with the deposit money. In 1994, a credit default swap (CDS) which is a financial swap agreement was invented by Blythe Masters from JP Morgan. It designed to transfer the credit exposure of fixed income products between two or more parties and it was increased in use in the early 2000s. In the past, borrowers were able borrowed mortgage to purchase a home that they may not affordable. Many banks had put these mortgages from housing market together into packages of securities, created credit default swap (CDS) and known as synthetic collateralized debt obligations (CDOs). In 2000, the Commodity Futures Modernization Act had exempt credit default swaps from regulation was passed. Besides that, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) largely exempt credit default swaps from regulation. By the end of 2007, the amount of outstanding (CDS) was $62.2 trillion and was $25.5 trillion in early 2012. The lack of transparency in credit defaults swaps market became a concern to regulators. In March 2010, the Depository Trust and Clearing Corporation (DTCC), an American post-trade financial services company which provide clearing and settlement services to financial markets announced gave regulators greater access to its credit default swaps database. Credit rating agencies (CRAs) is a firms paid by the banks who employ them to rate debt instruments/securities according to the ability of debtor to make repayment. These agencies failed to remain committed to its own credit-rating standards led to the financial crisis occurred. The agencies had gave their highest ratings to over three trillion dollars of loans to homebuyers with no income proved by documents and bad credit record. Over half a trillion dollar was losses and hundreds of billions of dollars’ worth of triple-A securities were downgraded five levels to a speculative grade. On January 2017, one of the rating agency “Moody’s Investors Service agreed to pay nearly $864m to settle with US federal and state authorities over its ratings of risky mortgage securities during 2008 financial crisis. In addition, EU regulator fines Moody’s €1.24m for breaching credit rating rules and European Securities and Markets Authority (ESMA) carried out policy work its role as the single supervisor of credit rating agencies within the European Union. ESMA published its market share calculation for EU registered credit rating agencies (CRAs). It is designed to increase awareness of the different types of credit ratings offered by each registered CRAs and helped issuers and related third parties to appoint smaller CRAs. In an addition, The Basel Committee on Banking Supervision had published Basel ? (Third Basel Accord) to prevent repetition of the financial crisis.  Main purpose of Basel ? is to enhance international regulation, risk management and supervision of banks. It required banks to maintain proper leverage ratios and minimum capital requirements to avoid the liquidity risk of banks may out of control. 

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