12.What new disclosure ruleshave recently appeared? Do you think these disclosure requirements help or hurt financial institutions? Why or why not?
Answer:One rapidly expanding area of U.S. banking regulation today concerns disclosure rules—regulations requiring financial institutions to reveal certain information to customers (in an effort to encourage shopping around and avoid deception) and to regulators (to improve supervision of the industry). Among the most prominent examples are:-Truth in Lending Act (1968)-Home Mortgage Disclosure Act (1975)-Community Reinvestment Act (1977)-Truth in Savings Act (1991)-FDIC Improvement Act (1991)-Financial Services Modernization (Gramm-Leach-Bliley) Act (1999)Greater disclosure of the terms of services (especially loans and deposits) is stressed today in federal regulation in the United States. Disclosure of lending practices has increased in order to prevent discrimination, particularly against individuals and families seeking home mortgage credit. Banks and other covered lenders in the United States must report the racial composition of their approved and rejected home loan applications and the geographic areas in which they make and do not make credit available. They must pledge to advertise and make available their services to all qualified customers regardless of age, nationality, race, religion, sex, receipt of public assistance, and other irrelevant factors. Financial institutions are also asked today to disclose more about the market value of the assets on their balance sheets, so that capital market investors can make more informed decisions about the true worth of financial institutions whose securities they may wish to purchase. There is also increased pressure to disclose more about off-balance-sheet transactions, particularly the use of derivative instruments (such as futures, options, and swaps) for hedging purposes and for speculation, so the public can better assess the possible consequences of derivatives trading for the risk exposure of the institutions involved.17-8