http://www.washingtonpost.com/wp-dyn/content/article/2010/03/15/AR2010031503880.html 6 key points of the financial regulation legislation Tuesday, March 16, 2010; A12 Dodd's second draft of financial reform legislation tracks closer to the bill that passed the House in December, eliminating several of the bold reforms he proposed last fall. But Republicans remain opposed, despite Dodd's decision to incorporate their ideas on some issues. 1 A Consumer Financial Protection Bureau, housed inside the Federal Reserve, would write and enforce rules protecting borrowers from abuse by lenders. WHAT IT MEANS: The location of the agency is a nod to Republicans and conservative Democrats who oppose the creation of a free-standing consumer agency, but everything else about this proposal is designed to please liberals, giving the consumer agency sweeping powers and imposing few checks on that authority. 2 A Financial Stability Oversight Council, chaired by the Treasury secretary, would coordinate federal efforts to identify and manage risks to the financial system and the broader economy. What it means: Dodd wanted to give the council broad responsibility for policing systemic risks. After massive administration pressure, he agreed instead to give much of that power to the Fed. The oversight council will instead function essentially as the Fed's board of directors on regulatory issues, signing off on its decisions. 3 A new process would allow for the liquidation of large, failing financial firms. WHAT IT ME ANS: Companies could be liquidated by joint agreement of the Treasury Department, the Fed and the Federal Deposit Insurance Corp., which already administers bank failures and would play a similar role in the new process. Costs would be paid from a $50 billion pool of money gathered from large financial companies. 4 Credit-rating agencies would be regulated and liable for errors. WHAT IT MEANS: Breaking with the administration and the House version of financial reform, Dodd's bill would hold Moody's, Standard & Poor's and other rating agencies potentially liable for their judgments about the safety of bonds and other investments. The industry also would be regulated by the Securities and Exchange Commission. 5 Banks would face new limits on trading and investment activities. WHAT IT MEANS: The bill would restrict banks from running their own investment portfolios or hedge funds, an administration proposal known as the "Volcker Rule" that Dodd initially had rejected. The bill also would regulate the massive trade in derivatives, increasing the proportion of such trades that are publicly reported. 6 Some renovations would be made to the structure of federal banking regulation. WHAT IT MEANS: Dodd abandoned his earlier proposal to create a single banking regulator after critics argued that the upside was not worth the effort. The bill still would eliminate the Office of Thrift Supervision. The Fed's authority over smaller banks would be split between the FDIC and the Office of the Comptroller of the Currency. -- Binyamin Appelbaum,Washington Post
The lesson of the housing bubble bust and consequental credit/banking crisis is not one you are going to hear from politicians. The reason is that are taking the route of avoiding the blame that lies with themselves and blaming the bankers. That is why the politicians are promoting more regulation to control the bankers as the way to appease the voters, that is the public at large. So what is the real lesson? The lesson is regulation does not work. Thats right - regulation does not work. It didn't work this time. It didn't spot Madoff. It didn't intervene in the sub-prime CDO activity when delinquencies were rising and at least 2 of the major Wall Street banks were protecting themselves from this risk by buying swaps. Regulation and all the regulation bureaucrats just let everything crash into the wall. Regulation only brings side activity prosecuting alleged mickey mouse wrongdoings by hapless victims in order to win public approval. The answer is less regulation AND with no prosecuting authority. Its sole purpose needs to be to safeguard the credit and banking system from undue risk.
Politicans putting pressure on banks to make more loans did not help the financial crisis.Seems they still haven't learned their lesson.
Anyone else find the recent trend in 1000-page bills, disturbing? What the the heck is in this thing? Sure we get the broad strokes, but there's no way 1300 PAGES are needed to articulate it... Regulation is a tool used to protect industry from competition, imo. Look who's awarded more power to regulate banks and consumers? The FED. Who owns the FED? Large, private Banks - aka Wallstreet. So Dodd awarded Wallstreet even more power to regulate itself, police itself, and investigate itself if any of its operations qualify as "too big to fail", which, again, is defined by itself. If the public demands a sacrificial lamb, Wallstreet can always throw a token competitor under the bus at the taxpayers expense, and Dodd will pat himself on the back for doing such a great job. This bill represents a growing threat to America - the privatization of Government. Sure, Goldman can tap Blankfein as head of the NYFED, but at least there's some semblance of a Chinese Wall between Wallstreet and the Treasury. Now, this fucking idiot Dodd and the rest of the crew have done away with that Chinese Wall altogether. Regulatory authority is now being transferred en masse from Government Agencies, to the Private Sector - from Government regulators, to the FED. Same as electronic eavesdropping - ISP's, OS providers, search engines work in partnership with the NSA for "data sharing". None other than for our protection, of course! The very fact Government tripled the national debt to bailout a few Wallstreet banks and handed over newly-minted regulatory power to those same banks, proves we've got a Banking Dictatorship in this Country that's pulling the strings of Congress and the President like a fucking marionette. The answer was to let insolvent banks fail. All the derivatives are worthless when the counter-party goes bankrupt. Sure, the financial landscape would be radically transformed and recession, that much more severe. But instead, we've opted to party it up on the Titanic, curious at the rumblings beneath our feet while hammered at the bar, doing jello shots off some hookers tits. The answer was to let Free Markets work. Now, we've got a serious, serious debt problem that's about to implode this Country with banking psychopaths, heavily armed and on the loose. We're living in Mussolini's Italy. Corporate Fascism is the rule of the day. And who are 'the Allies', that will ride to the rescue and liberate us? The Communist Chinese?! We're in dangerous waters, folks.