Financial Reform Bill Signed into Law: An End of a GOP Era

Washington, D.C. (July 21) – President Obama signed H.R. 4173 Restoring American Financial Stability Act into law this morning ending a decade of Republican recklessness regarding the nation’s economic stability.

The legislation creates a Consumer Financial Protection Bureau with the authority over a large portion of the nation’s financial industry. The Bureau will have broad powers in dealing with and preventing any further abuses such as those, which caused the collapse of the nation’s economy during the Bush administration.

Regulators will be monitoring large transactions within the financial industry giving the government new authorities concerning, failing institutions which would have a detrimental impact on the nation’s economic stability.

It took an new Democratic Leadership and nearly two years to revamp a system of economics, commonly known as the failed ‘Trickle Down Economics’ policies placed into action in the early years of the Republican rein over the nation. An era where the rich enjoyed financial freedom and the rest suffered financial burden.

The Treasury Secretary is set to lead a council of regulators to identify threats to the system giving them the authority to review both banks and nonbanking firms. Credit Unions, and insurers that enjoyed freedom from past regulations will now, fall under the same scrutiny as the rest of the nation’s financial industry.

Included in the bill, an orderly way to ‘wind-down’ failing companies if, regulators determine a company poses a threat to the system, it would be dismantled and sold off as separate entities. This provision is to prevent any ‘panic’ in the industry allowing the Treasury to pay off the failed financial institutes obligations to be repaid by funds from fees and money raised via the failed company’s shareholders.

The bill will also ban proprietary trading, when banks gamble on their own profit rather than in the interest of their clients. Also referred to as the, Volcker Rule, banks will be forced to stick to taking deposits and making loans, leaving investment banking to firms the taxpayer would not be forced to bailout.

Speculation over derivatives, under the new law, most derivatives would only be traded openly on exchanges, not behind closed doors. Banks will no longer be able to trade on high-risk derivatives such as, energy and metals.

Banks will still be allowed to trade openly on certain derivatives such as gold, interest rates, and foreign currencies. Other derivative speculators such as wealthy investors, and hedge funds will face even tougher oversight.

Credit reporting agencies haven’t escaped the eye of the Treasury department either, accountability will be high on the list of priorities. Investors can now sue agencies for recklessly ignoring risks resulting in financial loss.

From the consumer standpoint, a new Consumer Watchdog, will oversee products and services, from mortgages to check cashing fees inclusive of non-banking companies. Mortgages in particular will be target as; trillions of dollars were shelled out in during the past administration to cover borrowers that had marginal resources to repay their loans.

The bill signing ceremony drew approximately 400 people including, lawmakers, business leaders, and other key players during the creation of the bill.

Chief Editor – WorldNewsVine

Posted by worldnews on July 21, 2010. Filed under Banking and Finance,economic recovery,economy,Money,National News,Right Wing,US Business News,US Politics,WorldNewsVine. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.