President Barack Obama turned up the heat Saturday on lawmakers to pass an ambitious Wall Street regulatory overhaul, as the measure headed for a key vote in the Senate. "The reform bill being debated in the Senate will not solve every problem in our financial system: no bill could," Obama said in his weekly radio address ahead of what is expected to be an up-or-down vote in the Senate on Wednesday. "But what this strong bill will do is important, and I urge the Senate to pass it as soon as possible, so we can secure America’s economic future in the 21st century."
Obama, aiming to clamp down on the excesses that led to the near-meltdown of the financial system in 2008, is promising the most sweeping regulatory reform drive since the Great Depression of the 1930s. To push that through, he is trying to build momentum for Democratic efforts in Congress to overcome the Republicans’ resistance and pass a new Wall Street reform law.
Republican leaders have so far been united in opposition to the bill, which seeks to impose tougher regulations on banks and finance firms, and to set up a new consumer financial protection agency. They say Obama’s reforms would push the heavy hand of government deeper into the US free enterprise system, leading to a culture of financial bailouts, a charge that the Democrats deny.
Obama argued that the proposed reform would help level the playing field in the financial industry by ensuring that all lenders, not just community banks, were subject to tough oversight. He said the bill under consideration will prevent banks from taking too much risk and will give shareholders more say on executive pay.
"The Wall Street reform bill in Congress represents the strongest consumer financial protections in history," the president pointed out. "You’ll be empowered with the clear and concise information you need to make the choices that are best for you. We’ll help stop predatory practices, and curb unscrupulous lenders, helping secure your family’s financial future."
Once the senators finish offering amendments, they will have to come to an agreement on ending the debate. And if that is achieved, the reform proposal could be brought to a final vote as early as Wednesday…
The Financial Reform Bill is opaque to me. As much as I’d like to give it a thorough vetting, there was a block to my plan [shown on the right]. It’s kind of long. I wonder if anyone has read the whole thing. Here’s a brief summary from the Wall Street Journal before the debate:Bill’s Highlights
Dodd’s proposal touches on several areas. Key points:
- Consumers: A consumer-protection division would be created within the Federal Reserve, with the ability to write new rules governing the way companies offer financial products such as mortgages and credit cards. It would have authority over any bank with more than $10 billion of assets, and certain nonbank lenders.
- Banks: The Fed would oversee bank holding companies with more than $50 billion of assets. Regulators would have the discretion to force banks to reduce their risk or halt certain speculative trading practices.
- Failing companies: The government would be able to seize and break up large failing financial companies. Big companies would have to pay into a $50 billion fund to finance the dissolution of a failing firm.
- Systemic risk: A new council of regulators would be created to monitor broader risks to the economy. The council could strongly urge individual agencies to take specific actions to curb risk.
- Corporate governance: The Securities and Exchange Commission would have authority to write rules giving proxy access to shareholders who own a certain amount of stock. Shareholders would have a nonbinding vote on compensation packages for top executives.
- Hedge funds: Large funds would have to register with the government.
Obama’s terms for financial overhaul remain mostly intact
Washington Post
By Brady Dennis
May 17, 2010The Senate this week could hand President Obama his second major legislative victory of the year, both on administration priorities that seemed in doubt not long ago. Passage of a 1,400-page bill to overhaul the nation’s financial regulations would come just two months after Obama signed a landmark health-care overhaul. But in the case of financial regulation, much more so than with health care, the Senate bill largely reflects the administration’s initial blueprint, despite the fervent efforts of lobbyists and lawmakers of all stripes to alter it.
Democratic leaders and administration officials have been careful not to boast about their success in keeping the legislation mostly intact, with some provisions growing even tougher during the Senate debate. "I’m hesitant to talk about it being done, because it’s not," Sen. Christopher J. Dodd (D-Conn.), who has shepherded the bill through the Senate, said in an interview from Connecticut over the weekend. But, he allowed, "we are on the cusp of doing something pretty significant."
Republicans acknowledge that passage seems certain and that a handful of GOP members likely will join Democrats, which would surpass the 60-vote threshold needed to overcome a filibuster. From the administration’s viewpoint, "this bill has got to be an out-of-the-park home run," said Sen. Bob Corker [R-TN], who had negotiated with Dodd but doesn’t support the current Senate bill, saying it unnecessarily expands government power and does not address the core causes of the crisis. "I realize this bill is going to pass. Just policy-wise, it ended up in a different place than I had hoped."
The bill would, among other things, create an independent consumer watchdog aimed at protecting borrowers from lending abuses, establish oversight of the vast derivatives market and enable the government to wind down large, failing firms. It has its share of critics – those who think it goes too far, and those who say it doesn’t go far enough. But several senior administration officials said they are surprised at how many of their demands have survived.
Administration officials, along with Dodd, who chairs the Senate banking committee, and House Financial Services Committee Chairman Barney Frank [D-MA], have walked a fine line: fending off most conservative efforts to scale back core elements of the legislation while resisting most liberal attempts at harsher regulations, including strict caps on the size of big banks. Senate Democrats also have courted key Republicans, including Susan Collins and Olympia J. Snowe of Maine, by accepting some of their recommendations, including adding rules tying capital requirements to risk and clarifying which businesses would be covered by the new consumer agency.
Despite some heated rhetoric, the process has proven far more amiable than the bitter battle over health care. Republicans have added amendments to Dodd’s bill and partnered with Democrats on others…
While my title [cross fingers and pray. something’s working in the senate…] suggests luck or providence. I expect the truth is that Obama and/or his team are masters of the political universe. The decision to put Health Care before Financial Reform was probably brilliant politicking [though, for the life of me, I can’t figure out why]. Don’t argue with success. This week comes the debate about Derivatives – which, to my mind, is the big one. Derivatives can destroy Capitalism, because they turn it into too much of a game. They detach the financial sector from the actual world of business. If we must have Derivatives, they have to be kept in the realm of insurance and risk management for investments in real things [that actually exist], backed by capital [that actually exists]. But I digress. Bob Corker may be right. This may be Obama and the Democrats knocking it out of the park for our country and shutting down the casino…
[…] Theocrats, and the Sarcasticrats, something very important is happening in the halls of Congress [cross fingers and pray. something’s working in the senate…]. They’re passing a real Financial Regulation bill. Senate Passes Financial Overhaul Bill […]