Thursday Congress passed the most ambitious financial overhaul since the Great Depression and now the shift will turn to implementing the new rules and regulations. The financial reform measure passed almost on a purely partisan vote with only three Republicans joining 57 Democrats in approving this landmark legislation.
The president will sign the bill next week and commented that the bill will "protect consumers and lay the foundation for a stronger and safer financial system, one that is innovative, creative, competitive, and far less prone to panic and collapse."
The aim of the Financial Reform Bill was to avoid the repeat of the financial meltdown in 2008, which led to the worst economic crisis the nation has faced since the Great Depression. The hot question abuzz is that if this legislation is in place to prevent the next financial meltdown, then why was Fannie Mae and Freddie Mac left out of the reform measure? Both mortgage giants have currently received close to $145 billion dollars of taxpayer money with more to follow, and the financial crisis began in the housing sector; so why are they not part of financial reform.
The second sticking point is that the legislation would create a system risk council, comprising the most senior government regulators, to try to identify potential dangers in the financial system. It would create a powerful consumer financial protection bureau to be housed in the Federal Reserve, and would impose a new regulatory framework on the trading of derivatives, the complex instruments that were at the center of the 2008 downturn.
The question is who overseas this new bureau? Now that it passed will it truly prevent the next financial meltdown, or is it what it appears...more bureaucracy and bigger government. Only time will tell.
No comments:
Post a Comment