This past week saw Majority Leader Sen. Harry Reid attempt to ram the Financial Reform Bill through the Senate with no further amendments or discussion by calling for the vote. The tally came to "57 to 42 in favor, three votes shy of the 60 needed to overcome a filibuster," as reported by the Washington Post's Brady Dennis and Shailagh Murray. Two republicans voted with the majority Democrats while two Democrats voted against. When Reid saw how things were going he voted "no" himself which, according to Senate voting rules, provides him with the
opportunity to call for the vote again on Thursday afternoon. The current forecast is that financial reform will finally be passed in the senate after three weeks of debate and relatively non-partisan negotiations compared to what happened with the Healthcare Reform Bill.
This is good, but according to an article by Alain Sherter entitled “End Game: Senate 'Compromise' is Gutting Financial Reform” there are many parts of the bill that have been altered considerably. He says that, “this has really been a massacre of what was originally a fairly decent bill.” According to Sherter, we would have been better off if the bill had been passed sooner, without so much adversity and alteration. Sherter's opinion is somewhat at odds to that of other analysts who, as we reported May 18th, see the Obama administration's original
bill as still basically intact. However, as we warned in our last post and as Sherter has found, the compromises are continuing in the Senate thereby threatening to erode the legislation further.
One part of the bill that Alain mentions that has been negatively altered is the Consumer Financial Protection Agency (CFPA). Apart from the fact that we mentioned a few days ago that the CFPA would be under the Fed - a bit like putting the fox to guard the hen house - it is also a problem that the rules of the CFPA as defined in the current bill could be vetoed by other financial regulators which erodes the power of the CFPA to oversee the banking system. Another key part of the bill that he mentions has to do with states gaining more authority to be
able to regulate national banks. The problem is that it also makes it easier for the banking regulators to stop states from being able to investigate consumer protection cases, which is dangerous.
An amendment to the bill proposed by McCain-Cantwell proposes to bring back the Depression-era legislation called the “Glass-Steagall Act” which Congress repealed in 1999 and which some people believe has led to the excesses that caused to financial system crash. This act separated commercial and investment banking, but it was repealed, and is being rejected again now, because it would “harm big U.S banks’ competitiveness.” It sounds like a good idea but, sadly, the banking lobby is very active against bring this legislation back to life and so far, it’s not supported in the Senate despite the bi-partisan support by McCain-Cantwell.
There is some kind of financial reform being passed, which is a good thing but, overall, Sherter says that the main goal it to correct some of the problems from the past, not to simply create new laws. It seems that the financial reform has not had the success that everyone originally might have hoped for. All the fighting over the bill didn’t seem to bring the bill to a good conclusion, it seems that in order to compromise a lot of important parts were changed or removed. It’s sad that the parties were not able to work together in unity to create strong
new legislation, it seems that in the end we got a watered down version of what the reform should have been. And this is where we leave the story, some reform has been passed, but it is not satisfactory to all. There are also some elements yet to be decided.
opportunity to call for the vote again on Thursday afternoon. The current forecast is that financial reform will finally be passed in the senate after three weeks of debate and relatively non-partisan negotiations compared to what happened with the Healthcare Reform Bill.
This is good, but according to an article by Alain Sherter entitled “End Game: Senate 'Compromise' is Gutting Financial Reform” there are many parts of the bill that have been altered considerably. He says that, “this has really been a massacre of what was originally a fairly decent bill.” According to Sherter, we would have been better off if the bill had been passed sooner, without so much adversity and alteration. Sherter's opinion is somewhat at odds to that of other analysts who, as we reported May 18th, see the Obama administration's original
bill as still basically intact. However, as we warned in our last post and as Sherter has found, the compromises are continuing in the Senate thereby threatening to erode the legislation further.
One part of the bill that Alain mentions that has been negatively altered is the Consumer Financial Protection Agency (CFPA). Apart from the fact that we mentioned a few days ago that the CFPA would be under the Fed - a bit like putting the fox to guard the hen house - it is also a problem that the rules of the CFPA as defined in the current bill could be vetoed by other financial regulators which erodes the power of the CFPA to oversee the banking system. Another key part of the bill that he mentions has to do with states gaining more authority to be
able to regulate national banks. The problem is that it also makes it easier for the banking regulators to stop states from being able to investigate consumer protection cases, which is dangerous.
An amendment to the bill proposed by McCain-Cantwell proposes to bring back the Depression-era legislation called the “Glass-Steagall Act” which Congress repealed in 1999 and which some people believe has led to the excesses that caused to financial system crash. This act separated commercial and investment banking, but it was repealed, and is being rejected again now, because it would “harm big U.S banks’ competitiveness.” It sounds like a good idea but, sadly, the banking lobby is very active against bring this legislation back to life and so far, it’s not supported in the Senate despite the bi-partisan support by McCain-Cantwell.
There is some kind of financial reform being passed, which is a good thing but, overall, Sherter says that the main goal it to correct some of the problems from the past, not to simply create new laws. It seems that the financial reform has not had the success that everyone originally might have hoped for. All the fighting over the bill didn’t seem to bring the bill to a good conclusion, it seems that in order to compromise a lot of important parts were changed or removed. It’s sad that the parties were not able to work together in unity to create strong
new legislation, it seems that in the end we got a watered down version of what the reform should have been. And this is where we leave the story, some reform has been passed, but it is not satisfactory to all. There are also some elements yet to be decided.
On Thursday May 20, 2010 the Wall Street Journal reported that the U.S. Senate "approved the most extensive overhaul of financial-sector regulation since the 1930s, hoping to avoid a repeat of the financial crisis that hit the U.S. economy starting in 2007." Since the House of Representatives passed a bill in December that is focused on the same purpose, the two bills will now go to Conference Committee where anything can happen to the legislation. Nevertheless, Barney Franks was heard on CNBC last night predicting that the reconciled bill will be signed by the President "before the 4th of July." Also speaking on CNBC, Nouriel Roubini assess the bill as “cosmetic” and predicted that it won’t prevent another crisis.
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