What’s in the Financial Reform Package

Well, we just saw the passage of a very hotly debated health care reform bill, and now the government has set out to bring health to something that is really sick – the huge mess that is the  financial system in the US.  Since no one wants to be seen as siding with Wall Street and the HUGELY unpopular and dysfunctional banks, it is highly likely that an agreement will be reached and a bill passed some time this year.  But what would be in this bill?  Several different bills have been proposed by the House and Senate, but the basic tenets of the bills are as follows:

• Government regulators would receive more authority to monitor financial dealings such as mortgages, securities, etc.
• Financial firms would be forced to reduce debt and have more capital in reserve – basically like putting a larger down-payment on a house or car instead of taking larger loans
• Government would be allowed to seize failing financial institutions just like they do banks now
• Creating an independent consumer protection agency with the power to write rules for banks, credit agencies, and lenders - some want this inside the Federal Reserve, some want it outside – some businesses may be exempt from the oversight of this agency
• The Senate version permits state attorneys to sue businesses who violate the laws of this new agency, the House bill does not

It will be interesting to see what agreement is reached – the Senate is meeting today and it looks like partisan politics may once again delay decision-making.  Let’s all hope that something can be decided, passed, and enacted soon – because I think we can all agree that something needs to be done to make sure we never end up in another financial crisis like this one again.