House Passes Sweeping Financial Reform Bill
Dec 13th, 2009 | 21 responses
Naturally, 100 percent of House Republicans voted against the bill:
More than a year after the near-collapse of Wall Street plunged the economy into crisis, a divided House on Friday approved the most sweeping overhaul of the nation’s financial regulatory system since the Great Depression.
“We are sending a clear message to Wall Street: The party is over,” House Speaker Nancy Pelosi said after the 223 to 202 tally, which failed to attract a single Republican vote.
[...]
The 1,279-page House bill would create a new federal agency dedicated to consumer protection, establish a council of regulators to police the financial landscape for systemic risks, initiate oversight of the vast derivatives market and give the government power to wind down large, troubled firms whose collapse could endanger the entire financial system. The legislation also would give shareholders an advisory say on executive compensation, increase transparency of credit-ratings agencies and set aside billions of dollars to aid unemployed homeowners.
The reasons given by Republican House members for opposing the bill are quite telling (emphasis is mine):
House Republicans were unanimous in their opposition, saying that the bill would amount to an egregious overreach of government powers and leave unresolved many of the problems that led to the recent crisis. They argue that it would create unnecessary new layers of bureaucracy and stifle financial innovation.
“We are left with a perpetual Wall Street bailout bill,” Rep. Jeb Hensarling (R-Tex.), an outspoken critic, said during Friday’s debate. “We are left with a bill that will crush job creation at a time when our nation needs to be creating jobs. We have a bill that assaults the fundamental economic liberties of every American citizen.”
Of course, “financial innovation” is what got us into this mess to start with. And if you go by the unitary executive theory propounded by Dick Cheney and beloved by the Bush administration’s right-wing supporters, there is no such thing as an “egregious overreach of government powers.” The U.S. Constitution grants the President of the United States unlimited authority to do whatever he thinks is necessary to protect national security, and nothing is more vital to national security than a strong economy.
Republicans disagree, though. It’s Americans’ civil liberties that are discretionary. Economic liberties are sacrosanct — even though Wall Street has not created so much as one job for any American citizen outside of the financial industry, much less for every American citizen.
21 Responses to “House Passes Sweeping Financial Reform Bill”
And the chances of something like this bill reaching the President's desk are ?
Pardon ignorance, but why wouldn't they just expand the powers of the SEC?
Only the actions of Democrats can get 100% of Republicans to act in a sane manner, and 27 democrats joined them, once again making the only thing bipartisan about a Pelosi house bill being opposition to it.
Of course they have to create yet another new Federal agency and expand the Nanny State, to give the government the power to shut down private enterprise. Wonder how much pork and special interest spending they will funnel through this program. They will tout that this is creating jobs likely, LOL.
And waste a chance to add another agency and more levels of federal government bureaucracy? Come on, we are talking the Progressive side of the Democratic Party here.
between the SEC, OTS, FDIC, the system of federal reserve banks, and other federal acronyms regulators already had more than enough authority and regulation to prevent this economic meltdown. the SEC, for example, was warned repeatedly over the course of at least a decade about bernie madoff. their response amounted to asking the shoplifter, “are you shoplifting?” rather than looking at at data available from CBOE [regarding the options trades he claimed to be making but never entered] and others to see if he was doing what he said he was doing OR if the data provided them by more than one whistleblower was valid. also, under the bush administration, they expanded leverage for the investment banks from 13:1 to 40:1 … a wholly catastrophic decision.
the SEC is a huge part of the problem
the FDIC is no different … they've repeatedly turned their head to avoid taking prompt corrective action [as phrased in the laws!] as they are required to do when confronted by banks with capital reserves far below where they need to be. 133 banks have failed this year [i forget how many died last year, adding to the total] but thats a drop in the bucket compared to the 1000 banks believed to be in dire condition.
the FDIC is a huge part of the problem
the federal reserve bank of new york orchestrated the massive gov't bailout of AIG, thus saving goldman sachs and others from their own unmanaged risk-taking. that president of the federal reserve at the time was none other than our current sec'y of the treasury, tim geithner. they also failed to curb all the idiotic derivative trades going on. don't even get me started on the actions [or lack thereof] of 'regulation free financial systems' alan greenspan or of helicopter ben bernanke
for this and other many other reasons the federal reserve banks are part of the problem
the US congress leaned on FASB to suspend mark-to-market accounting. this allows the banks to carry loans on their books at full-value [aka extend and pretend] rather than recognizing the losses. to date all of the failed banks have been reported full-value for residential and commercial loans but when closed down revealed markdowns of 40% – 60%. the congress also stepped in to prevent the CFTC from doing the regulation they planned of derivatives like CDS, MBS and so on.
while these are a small drops in the bucket, the US congress is part of the problem
president obama has larry summers, tim geithner, ben bernanke and james rubin as key figures in his economic team. these self-serving idiots have been up to their eyeballs in destroying our economy and our middle class for decades.
president obama is part of the problem
this listing goes on and on and on. what we see is an ongoing concerted effort to improve the condition of the haves at the expense of the have-nots. while we have certainly seen needed laws and regulation torn down … gramm-leach-bliley's repeal of glass-steagel, the CFTC being prohibited from regulating derivatives, the SECs relaxing of reserve ratios … we still had a fair amount on the books that could have been used to rein things in. alas, those with the authority and responsibility to regulate did so. instead were and are complicit; they turned their heads and boarded the gravy train rather than saying ENOUGH
http://www.nytimes.com/1999/11/05/business/cong…
http://www.rollingstone.com/politics/story/3123…
while you're absolutely right about the grand no party [look in dictionary under 'evil'] the dems are absolutely no better; they're merely less organized.
everything i'm reading about this bill [and no, i have not read the actual bill] suggests it is very likely to make things worse. the built-in loopholes are reportedly pretty staggering. there are likely to be some good things in there but the derivatives exemptions [for example] and the banking exemptions sound pretty awful. one of the reports i read suggested something on the order of 90% of the nearly 8000 banks would be exempted [we had around 8100 before the FDIC started closing them]. other reports suggest that we're once again stepping on state-based regulation. the states have tried in the past and failed to exert their influence over the banks but our dear friends in the government shut them down.
even better, the white house appears to have attempted to make bank bailouts perpetual and deny any congressional oversight! hmmm … shades of hank paulson's three-page [gimmee $700b with absolutely no legislative, executive, judicial or any other oversight -- ever!] ransom note last near. gimmee the money now or the bunny gets it!
at least, so far as i know, the paul-grayson audit the fed bill is part of this legislation. thats a good thing and universally opposed by all the evil-doers of the world. you know, people like almost everyone in the GOP, barney frank and [i think] chris dodd.
huzzah
why is it ok for corporations to declare bankruptcy and completely reorganize their debt but not for individuals?
why do we allow judges to modify loans for vacation, investment, etc homes but not primary residences? the bankruptcy re-work under the shrub appears to have achieved nothing more than tightening the screws on people for the enrichment of business, nothing more.
if someone is so foolish as to take on more credit and debt than they can service, there should be consequences. they should be held accountable. if a lender makes a bad loan they should take a haircut. if the mortgage writer/broker does not do their due diligence, if there is no probability of the loan being paid back [and frequently they didn't care since they were just rolling them into the securitization market] then they're just as wrong as the borrower … probably more so. the lending standards weren't just lax … there weren't any standards.
it makes no sense to tie the hands of the bankruptcy process if it serves no purposes other than enriching the banks. they didn't manage their risk. now we're on the hook for all of the risk while many of them are keeping the ill-gotten gains.
I hope you weren't expecting me to disagree, if so sorry to disappoint, except on the last point.
Let the banks hang if they make bad loans, but don't turn to the courts to do it, let them deal with the free market instead.
LOL … no sir, not at all. no expectations either way. just asking the questions, by way of constructive debate, as to your comment about the cram-dwon provision being nixed.
imho … there's room on both sides for healthy debate.
personally, i wish they had managed to include cram-downs. at the very least primary homes should qualify whereas secondaries/investments shouldn't. thats not to say that i necessarily believe that any property or debt should be exempted, but i specifically don't think the primary and likely only home of someone reading from the book of bankruptcies should be.
cheers
Just a couple comments.
The Bankruptcy code does not allow the judge to rework loans on any homes in Chapter 13. None. Period. I think it would be a good idea if they could on primary residences but right now they cannot rework any loans in terms of reducing principal/interest/etc.
The most that can be done is if the loan term is less than 5 years the plan can stretch out the payments to 5 years, but that's about it.
One concern I had with the law was giving Congress the power to run monetary policy, it seems to me putting politics into that is a bad idea.
I tend to agree with the idea that it's unfair to lay all opposition on the GOP since some Dems voted against it.
Sadly typical for Congress. If the GOP pushes a bill they go all the way to the right with too little regulation while the Democrats act as if they think capitalism is evil (I know the Dems don't think that though I wonder about some bloggers LOL).
I wish we could have gotten a better bill that had a chance of passage.
Since Glass-Steagall, you know, worked, wouldn't the simplest way to fix the mess be to implement it again?
<sniff – sniff>
that whiffs of … logic. but really, you have to define whom it worked for. i think it worked pretty well for 'you' and for 'me'. alas … it didn't work at all for robert rubin. he had a huge windfall from citi riding on it being repealed since it made the recently completed citi takeover of travelor's illegal.
The idea that a judge could take control of a legal contract and alter it via a “compassionate” judicial activism is scary as hell. If they did this, you'd need spotless credit histories, a large income, or a huge down payment to get someone to sell you a house, and you'd have a lot higher up front costs as well. Forget about getting folks to invest in the housing market for low income folk, if the government could yank their legal contracts out from under the seller them on whim.
That's exactly what we need . . . yet another federal agency.
This seems to be the only way Congress knows how to operate. When the tens of thousands of laws on the book fail, just pass another law. And when the hundreds of federal agencies already in existence fail to solve the problem, just create another federal agency.
…while the Democrats act as if they think capitalism is evil (I know the Dems don't think that though I wonder about some bloggers LOL).
Well, wonder no more, oh questing one.
So is that a statement for or against capitalism ?
The argument that “this is another bureaucratic agency” is not a legitimate argument against the bill. The question is: will the new agency work? It could be just bureaucratic entanglement or it could be an effective protective mechanism for consumers. Knee-jerk anti-bureaucratic rhetoric replete with Jeffersonian vagaries does not an effective argument make.
There ARE a bunch of regulatory agencies. And they all collectively failed as the real estate bubble expanded and then burst. It took decades of anti-regulatory propaganda to weaken the financial oversight bodies to the point that they became revolving doors of industry.
So hear is my aphorism of the day: Capitalism is more at risk with too little regulation than with too much.
It was more a statement of knowing you were talking about me, and letting you know that I knew you were talking about me.
But if you want a serious answer, no, I don't think capitalism is “evil.” But I also think that's not a very helpful way to frame the issue. The word “evil” is way overused. I try to save it for when it's truly called for — like when we're talking about Dick or Liz Cheney.
I think capitalism has its good points, but it can become a very extreme ideology when it's not properly regulated. There is no room in pure capitalism for concepts like social or economic justice, and those concepts are important to me.
Does that answer your question?
[...] House Passes Sweeping Financial Reform Bill – The Moderate VoiceMore than a year after the near-collapse of Wall Street plunged the economy into crisis, a divided House on Friday approved the most sweeping overhaul of the nation’s financial regulatory system since the Great Depression. “We are sending a clear [...]
The question isn't just whether or not the new agencies will be 'bureaucratic entanglements', but also whether or not they represent new avenues of crony capitalism.
Remember all of the complaints during the Bush administration about the lobbyists writing the bills? Well, it seems the more things change, the more they remain the same.
“Come on, we are talking the Progressive side of the Democratic Party here.”
Cheap votes, cheaply bought — of course a new monster federal agency will be created. It's de rigeur.
* * *
“Remember all of the complaints during the Bush administration about the lobbyists writing the bills?”
Yet Obama's administration has overseen and approved the managed consolidation of the financial industry. The banks that are doing well (and which got bailouts) have done so well they can repay the money more quickly, more of it, than most of us imagined. That it's in part to free them to pay those who are paid well, well, is missing the key issue here, which is that they were in such good shape or so truly still-reckless that they felt they could afford to hugely repay the federal government much earlier than imagined. They're doing exceptionally well, and consolidating.
Y'all have heard it from me before, that it shouldn't be a surprise if the banks take over other big institutions like insurers. Aside from other large-scale issues, consider what that means should these financial institutions become much greater shareholders in businesses in this country, for example.