A Financial Regulatory Victory for Democrats
The Obama Administration has reached another milestone in its struggle to put the nation back on sound financial footing, with the signing of a new banking and consumer protection bill Wednesday. You may recall that the U.S. financial challenges emerged immediately after the election of President Barack Obama, but even before he took office. Since then, one strategy after another has been employed to deal with the issue. Today, most of the immediate threats to the economy have gradually waned, though most financial analysts including those within the administration believe the nation is not out of the woods yet.
The President’s new bill tagged “S.3217 - Restoring American Financial Stability Act of 2010” aims to hold a tighter reign on Wall Street. Documents emanating from the administration described the bill as one of “the most sweeping reforms of Wall Street since the Great Depression and the toughest consumer financial protections this nation has ever seen.”
The tough financial regulations contained in the bill are aimed at putting back some sort of regulatory sanity, which were removed decades ago. Many credible financial analysts believe the removal of such regulatory policies is what set the markets on a wild ride, where those profiting from the market were virtually left alone to set their profit margin on other sectors of the market, as well as the general population, the tax payers.
The new law targets the loopholes that the banks and other financial institutions used in the past, to go into wild and risky lending policies that brought them to the brinks of bankruptcy. It brings back some regulations into their activities, and also set caps on how much charges the banks could burden their customers and tax payers with.
For example, the bill aimed at plugging ways to reach back at the government for bailout, similar to the billion dollar bailouts that had to be given out to the “too big to fail” banks. More regulations will now be applied to bank investment issues, apart from being barred from speculative trade. And the past lending practice to customers with no scrutiny of their ability to pay, which was widely cited as causing the Housing lending crisis, has also been clamped down on, with the bill slapping such actions with fines. The bill is also reported to have addressed the charges bank burden customers with such as overdraft fees.
Many see the signing of the bill as another milestone victory for the Obama Administration after the healthcare reform victory because both are decades old issues that eluded other previous administrations. The paper though, opines that the victory may not translate into victory for the party in November elections, but probably in the President’s reelection time in two more years, after the regulations start to gradually translate into positive fixes for the economy.
The bill was earlier passed in the Senate after a full year of wrangling with the Democratic Party insisting that there be some form of regulation of Wall Street activities, and the Republican Party portraying the issue as an intrusion of government into the private market domain. The Bill finally passed by a 60-39 vote with a few Republicans Senators crossing over to make up the magic number needed for the bill’s passage, among them Sen. Scott Brown of Massachusetts and Olympia J. Snowe of Maine. Having studied the bill the Senators broke ranks as a matter of principle and reasoning to vote for the bill. Senator Russ Feingold (D-Wis) is the only dissenting Democratic Senator, who also gave his reasons for declining to vote for the bill.
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