Thanks to Wikicommons.
With the health care ordeal over (wait, is it really over?) it is time to return our lives to normal…Right?
Do you remember what “normal” is? Normal is all of us living in the WORST ECONOMIC TIMES SINCE THE DEPRESSION.
Well, in case you forgot, the folks in Congress haven’t… They are busy putting together legislation that will try to make sure such an economic disaster doesn’t happen again.
Now some of you might be saying: “wasn’t a financial reform bill passed last December?” That is partially true… the US House of Representatives did pass a bill; however, the Senate still has to pass their own version (and then the two version need to be merged).
First things first though; the Senate is now hard at work on their version.
Who is the driver behind this hard work? If you thought Senator Christopher Dodd, Chairman of the Banking Committee, than you are correct.
Dodd has powerful support as President Obama is taking a “strong hand with congress” to pass financial reform quickly.
Now you may be wondering… what is going to be in this financial reform bill that Dodd, the President, and friends are trying to get made into law?
Slate has provided us with some key highlights (With additional material by US Democrazy):
1) Bureau of Consumer Financial Protection: Housed within the Federal Reserve, the Bureau “would regulate all kinds of credit, from mortgages to credit cards to payday loans, with an eye toward keeping lenders from exploiting consumers.”
In the House financial regulation bill a similar organization exists but, as Daniel Indiviglio of the Atlantic, notes
there’s a sense that Dodd’s Bureau would have a touch more power than the House’s Agency.
2) “Too Big to Fail” Provision: Quite simply insurance that LARGE financial institutions have to pay into that would be used to cover large bank collapses.
RealClearPolitics explains this as
the largest financial firms will be assessed $50 billion for an upfront fund that will be used if needed for any liquidation.
3) Resolution Authority: Currently the Government can intervene with failing banks, even before they reach bankruptcy. Dodd’s bill would expand this to all financial organizations.
As described by The Economist:
If a failing firm were deemed a threat to the system, the Fed, the Federal Deposit Insurance Corporation and the Treasury, with the agreement of three bankruptcy judges, could impose an “orderly liquidation” on the firm, forcing shareholders and unsecured creditors to take losses.
4) Early warning system: This nine member board, headed by the Treasury Secretary would, as Investment News’ Editorial describers,
focus on identifying and addressing systemic risks posed by giant financial firms and investment vehicles that seemed likely to threaten the nation’s financial health.
Of course this bill does a WHOLE LOT MORE (its over 1,000 pages long). That means two things. One, there is plenty more within the bill so PLEASE feel free to add anything we missed. Secondly, anything this big and important is guaranteed to start a ruckus on the Senate floor so expect some wild debate.
Note from Editor to MZ_Hammer… I am assuming you did read all 1000 pages of the Financial Bill as I instructed?
Build a better mouse trap and the mice get smarter. Reform bills always seem to be passed after a disaster. WHAT WAS THE BANKING COMMITTEE DOING BEFORE THE CRASH.
Obviously they were not reading history books or watching the banking industry. While the iceberg was looming in the dark before the Titanic, the financial doom indicators were as bright as the sun, just like in 1929, 1901, 1893, 1873, 1869-1871, 1857, 137-1843, 1837, 1836, 1832, 1819. And just like in the years following these panics and depressions, congress passed reform bills.
After these reform bills were past, those driven by financial greed merely adapted to the new measures and developed new methods around the reforms. Pretty smart mice.