Like most bills, it was far from perfect. But I figured a rundown of what it DID accomplish is worth it.There was more than enough in the financial reform bill — now on its way to President Obama — to merit broad support. Yet, for Thursday’s final Senate vote on the bill, 60 to 39, just three Republicans joined 57 Democrats to support reform. In the House, only three Republicans voted for the bill when it passed that chamber in June, 237 to 192.
Republican opponents would have you believe that lack of bipartisanship was evidence of the bill’s unworthiness, but the margin of victory was really about partisan politics and not the bill’s content. That made the vote an even greater victory for Mr. Obama, who has had to fight for every inch of progress against entrenched Republicans (who have been willing to deny unemployment benefits to millions of Americans rather than cooperate with Democrats on anything).
As was the case with last year’s economic stimulus and this year’s health care overhaul, Republican opposition to the bill was primarily an attempt to drag down Mr. Obama by killing any legislative accomplishment.
When that effort was headed for failure, Republican leaders disparaged the bill on ideological grounds. On Thursday, Senator Mitch McConnell of Kentucky, the Republican leader, lashed out at what he called a “government-driven solution,” while the senior Republican on the banking committee, Richard Shelby of Alabama, bemoaned “vast new bureaucracies.”
Those are convenient and time-tested bugaboos to campaign by, but they ignore the urgent needs the bill addresses, and its achievements. Those include resolution procedures to help ensure that shareholders and creditors — not taxpayers — bear the losses when big financial institutions fail; new capital requirements for banks and other curbs to help quell speculative excess, including the regulation of derivatives and restrictions on proprietary trading.
To get all that, the bill had to withstand a lobbying juggernaut. Since January 2009, the financial sector has spent nearly $600 million to weaken reform, according to the Center for Responsive Politics. The lobbyists notched some victories, to be sure, mainly in the defeat of reforms that would have broken up large banks and done more to constrain risk-taking throughout the financial system.
But they also lost, especially on consumer protection. The new consumer financial protection bureau established in the bill is a milestone, not only for its intent and power to rectify lending abuses, but because it will institutionalize the insight that the safety and soundness of banks cannot — and should not — be measured by profitability alone, but by the impact that bank practices ultimately may have on consumers.
Having earned this victory, the Obama White House and the bill’s Congressional supporters still have another fight ahead of them — over implementing the bill. The legislation requires regulators to write hundreds of rules and conduct dozens of studies, a process that occurs largely outside of public view.
Complicating public trust in the process is the fact that some of the regulatory bodies — the Federal Reserve comes most prominently to mind — are still run by the same people who were blind-eyed as the financial crisis developed. And because the implementation phase is labor- and resource-intensive, public-interest groups, including consumer and investor advocates, will be outmatched by the financial lobby. Congress will have to be unceasingly vigilant during the rule-making to ensure that resulting regulations reflect lawmakers’ intent and the public’s needs.
The administration also must supply top-level fire power, and use the president’s bully pulpit, to guarantee that the bill’s promise is fulfilled.
Supporters of this much-needed financial reform bill took a well-earned bow on Thursday. Now they have to get back to work.
The Federal Government now has resolution authority to break up big banks.
The 2008 bailout bill was ended early.
Derivatives trading has to be moved to an external affiliate with no federal protections.
The consumer financial protection agency.
A full audit of the Fed's non-monetary policy.
And a variety of other restrictions. Yes, it's disappointing as opposed to what could've been ideal. Duh. However, it's also the strongest financial regulation bill since deposit insurance. At least it's a step in the direction opposite of 'Regulation bad, Market Good!'
Oh yea. It also cracks down on conflict minerals: Link But I don't expect anyone to cheer that.
