President Obama’s newest victory is the passage of the Financial Regulation Reform ( The Barney Frank / Christoper J. Dodd) Bill. The bill passed largely down partisan lines 60-39 with exception of Senators. Scott Brown(R-MA), Olympia Snowe(R-ME) and Susan Collins(R-ME).
The bill gives the federal government broad powers to control businesses, break up businesses, create a consumer protection agency. From AP via Yahoo Finance News:
From storefront payday lenders to the biggest banking and investment houses on Wall Street, few players in the financial world are immune to the bill’s reach. Consumer and investor transactions, whether simple debit card swipes or the most complex securities trades, face new safeguards or restrictions.
A powerful council of regulators would be on the lookout for risks across the finance system. Large, failing financial institutions would be liquidated and the costs assessed on their surviving peers. The Federal Reserve is getting new powers while falling under greater congressional scrutiny.
“I’m about to sign Wall Street reform into law, to 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,” Obama said.
“Unless your business model depends on cutting corners or bilking your customers, you have nothing to fear.”
Federal Reserve Chairman Ben Bernanke will get broad new powers under the new law.
One of the top regulators who will be charged with implementing the law, Federal Reserve Chairman Ben Bernanke, said the Senate vote represents a “far-reaching step toward preventing a replay of the recent financial crisis.”
The Republicans opposed the bill calling a monstrosity:
Republicans said the bill is a vast federal overreach that will drive financial-sector jobs overseas. Before the final vote was even cast, House Republican leader John Boehner called for its repeal.
The political benefits, however, stand to be overshadowed by lingering high unemployment. And Republicans were betting that public antipathy toward big government and worries over jobs would trump their anger at Wall Street.
“We’re going to be driving jobs and business overseas with this massive piece of legislation,” said Sen. Saxby Chambliss, R-Ga.
Sen. Richard Shelby, R-Ala., who worked with Democratic Sen. Christopher Dodd of Connecticut on certain aspects of the bill, denounced it as a “legislative monster.”
The biggest reform for the public is the Consumer Financial Protection Bureau:
The Dodd-Frank law will create a Consumer Financial Protection Bureau empowered to write and enforce regulations covering mortgages, credit cards and other financial products. Lenders face new restrictions on the type of mortgages they write and could not be rewarded for steering borrowers to higher-cost loans.
Borrowers are to be protected from hidden fees and abusive terms, but also will have to provide evidence that they can repay their loans, thus halting the no-document loans that had flooded the markets.
The Frank/Dodd Bill doesn’t cover the culprit of the financial collapse of 2008 Government Sponsored Entities Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac help create the sub-prime loan market to people who would not under normal circumstances get loans. People with bad credit histories, illegal immigrants who bought homes. Which in-turn encourage Wall Street Hedge Funds to buy these loans known as Mortgage Back Securities.