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The Good the Bad and the Ugly in the Dodd Bill
Here are some highlights regarding the 1,300 page bank reform bill released by U.S. Senator Chris Dodd (D-CN) yesterday.
The Good
1) Capital requirements and leveraging requirements to be set by
regulators (although some reformers would like these set in law to makes
sure they do the job).
2) Creates a council of systemic risk regulators called a Financial
Stability Oversight Council, which is generally a good idea. We don’t
want to just leave it to the Federal Reserve.
3) Obama’s “Volcker Rule” included, not perfect, but at least it made
the cut.
4) Consumer Financial Protection Agency remains a
strong institution with rulemaking and enforcement authority over banks
and nonbanks.
5) No new preemption of state attorneys general.
6) Credit rating agencies, which gave AAA ratings for toxic
mortgage-related securities, can be sued for damages if they don't do
their job.
7) Good reforms of the Federal Reserve system, including: NY Fed
President will be appointed; no bank selection of directors; no bank
personnel as directors; and a annual Fed audit.
The Bad
1) No break up of the too big to fail banks, no prevention of too big
to fail, just a costly process for unwinding the firms once they do fail
and a $50 billion industry fund to pay for such a collapse.
2) No caps on how large a bank can grow. The size limitation that was
included as part of the Volcker rule just says that companies cannot
merge to become greater than 10 percent of all liabilities in the
system. This enshrines the too big to fail institutions that do exist
and does not place a limit on the size that they can achieve
organically.
4) Continuing derivatives loopholes for foreign exchange traded
derivatives and there appears to be a problem with the lack of
regulation for non-clearing house participants.
5) No real reform of credit rating agencies, such as by creating public
or private competition for these failed institutions.
6) The Consumer Financial Protection agency will be housed at the
Federal Reserve a move to appease Republicans that will undermine its
legitimacy with the public. CFPA will not have authority over all banks,
just the largest banks, a bad idea sure to encourage risky behavior on
the part of smaller banks. CFPA authority over "large" payday lenders
(exempting how many?). Systemic risk regulators of the Financial
Stability Oversight Council can override CFPA rules with a 2/3 majority
vote and just one regulator could delay CFPA rules. These are bizarre
provision, isn’t it time to give consumer representatives a veto over
banking regulators and not visa versa?
The Ugly
Usually a draft like this sets the high water mark. With 1,500 bank
lobbyists on the hill and $390 billion spent on finance industry
lobbying in 2009, the public will need to weigh in to fix the problems
that do exist in the bill and hold off provisions that will make the
bill worse. Get involved! Send an email to your legislators at www.BanskterUSA.org.
- Posted in
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7 Comments so far
Show AllA corrupt bill by a corrupt Senator. What more can I ask for today?
The agency that can overrule CFPA decisions if they are considered to have an adverse effect on Wall St (wouldn't a Republican love this provision!) has 9 board members: the Secretary of the Treasury who will be Chairman (and the winner is... Timmy Geithner!), the Chairman of the Board of Governors of the Federal Reserve System, the Comptroller of the Currency (temporary), to be followed by the Director of the National Bank Supervisor, the Director of the Office of Thrift Supervision until the functions of that office are transferred to the Director of the National Bank Supervisor (haven't found out what happens to that vote), the Director of the CFPA, the Chairman of the SEC, the Chairman of the Commodity Futures Trading Commission, the Chairperson of the FDIC, and the Director of the Federal Housing Finance Agency.
Many of these people were not doing their job when the economy collapsed, so why are they put in charge of what the CFPA can and cannot do to protect consumers?
Personally I would move this agency into the Ugly column. Also even one vote from this board can hold up any decision by the CFPA to take action to protect consumers. I would say this pretty much turns the CFPA into a paper tiger. Thanks, Chris, for your parting gift.
When the people fear their government there is tyranny,
when the government fears the people there is liberty.
~ Thomas Jefferson
anyone expect the foxes to not only watch the henhouse, but clean it?
Hmmm
We are supposed to be living in a representative democracy. At yet the author and virtually the entire main stream media think handing over the rest of the keys to our ecomonic security to the FED is a great idea.
Lets think now just for a minute (please) the FED has stated in court that it does not answer to any of the branches of the government. In fact it has directly threatened ecomomic destruction if they are even audited. This group of PRIVATE banks represent the for profit banking world. Many of the controlling stock holders of the federal reserve banks are foreign nationals. These banks were NOT chosen by the American people. The people that control them were NOT chosen by the American People. Most importantly the people that control these banks (that control us) cannot be controlled in any way by us, let alone removed. Simply put we must remove the FED completely. Like a cancer running amok, this is the only way to protect ourselves
Anyone who thinks giving these crooks more control is a good idea have to be either corrupt, crazy or just plain stupid.
Hmmm
Just a quick follow up.
So sum up whats wrong with the FED in a nutshell.
TAXATION WITHOUT REPRESENTATION!!!
I am sick and tired of paying my hard earned money to a bunch of private bankers! In simple terms we are paying them to create our own money. WHY?