Financial reform bill emerges from committee, but is it any good?

I know that a number of consumer groups and unions are coming forward to support the financial reform bill that came out of conference committee on Friday. Among those singing the praises of the bill is Elizabeth Warren, the woman who heads the congressional panel overseeing the government’s bailout of American banks, whom I quote here often. The following clip comes by way of the Huffington Post:

…Elizabeth Warren’s statement comes as she is routinely floated as the best candidate to head the Consumer Financial Protection Bureau. “It has been more than 20 months since the largest financial crisis since the Great Depression, and we are still living under the same set of rules we had in place before the meltdown. Thanks to the leadership of President Obama, Chairman Frank, and Chairman Dodd, that’s about to change. Members of the House-Senate conference committee and their staffs worked through the night to produce the strongest set of Wall Street reforms in three generations. They created a strong, independent consumer agency that will have the tools to rein in industry tricks and traps and to cut out the fine print. For the first time, there will be a financial regulator in Washington watching out for families instead of banks,” said Warren.

Warren didn’t mention in her statement that the CFPB won’t have the power to regulate lending by auto dealers, an often predatory practice involving the second-largest purchase a consumer typically makes. The Pentagon battled the auto dealers over the carve-out, arguing that soldiers are being ripped off so routinely that it is damaging military readiness and national security.

The auto dealer lobby is chest thumping. Ed Tonkin, chairman of the National Automobile Dealers Association, said that the carve-out was “a testament to the hard work of all of the auto dealers and dealership employees around the country who made sure that the merits of the issue were heard. Their grassroots efforts truly made today’s victory possible”…

While I respect Warren’s opinion, I’m more inclined to agree with MSNBC’s Dylan Ratigan, who had the following to say:

The same Washington spinsters who have driven our country into the ground seem to be out in full force this morning, claiming that their latest policy “victory” is the most “sweeping change” of our financial regulatory since the Great Depression.

Actually, it is nothing more than window dressing.

The real sweeping change of our financial system took place over the past 20 years. The irresponsible repeal of Glass-Steagall in 1999. The Commodities and Futures Modernization Act of 2000 by Larry Summers and Bob Rubin — the one that legalized the most destructive financial instruments of all, derivatives. The leverage exemption at the SEC in 2004, asked for (in person) and received by Hank Paulson and friends.

Of course, there are small victories here — there is better investor protection and, most importantly, an awakened citizenry.

What’s not fixed?

– The Cops (regulators and ratings agencies) working for the crooks.

– Banks still Too Big To Fail.

– Banks gambling with your deposits.

– Banks allowed to “mark to myth” and use off-balance sheet accounting to bonus themselves into the atmosphere, with the taxpayer taking the fall.

– Banks getting trillions from the Fed, Fannie and Freddie — AKA you, the future and present taxpayer.

What does it mean for us?

It means that the same people who brought you these horrible changes — rising wealth discrepancy, massive unemployment and a crumbling infrastructure — have now further institutionalized the policies that will keep the causes of these problems firmly in place…

As is often the case with this administration, it’s a nominal win. It makes things a bit better than they were, but it doesn’t really get to the root of what’s ailing us. I suppose I should be happy that we’re taking a step forward, but, given the magnitude of the work that needs to be done, I’m finding it hard to do. This, in my opinion, isn’t the time for tepid responses. This is the time for decisive action that will put our nation on a more sustainable path forward. Unfortunately, it would seem, we didn’t elect a man either capable of, or willing to deliver the real change that we so desperately need.

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2 Comments

  1. Posted June 27, 2010 at 8:39 am | Permalink

    No comments on this? I know it’s complicated, but still…

    The New York Times, by the way, has a piece this morning about the lobbyists lining up, now that the bill is through committee, to influence specific rules and regulations.

    http://www.nytimes.com/2010/06/27/business/27regulate.html?th&emc=th

  2. TK2
    Posted July 1, 2010 at 2:31 pm | Permalink

    Only one comment and it’s from you. Pretty sad commentary on America and how little people actually care.

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