December 11, 2009

• U.S. House Approves Wall Street Reform, Pt.2
    The party's over.

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  It only makes sense that any law aimed to protect consumers against the deceptive and predatory actions of the credit card and financial industry would be strongly opposed by the financial industry. Jim Guest, President of the Consumers Union which publishes the Consumer Reports stated that the new agency will end the credit card companies and financial institutions from abusing Americans. The agency will also help to educate consumers with financial information to enable them to make sound financial decisions. However, the U.S. Chamber of Commerce disagrees. It ran aggressive media ads and lobbied against the consumer protection agency and believes that that tougher regulation of credit cards, mortgages, loans, and other credit products could end up hurting consumers. The Act will provide the following protections for consumers:

  • Creates new roles for existing governing agencies including the Federal Reserve and will monitor systemic risk.

  • Allows the Federal Deposit Insurance Corp (FDIC) to free up roadblocks in failing credit card and financial institutions so that contracts and consumer concerns can be handled.

  • Establishes a "Systemic Dissolution Fund" that will be used to assist credit card and financial institutions to diminish its assets when failing. The fund will be supported by assessments on financial institutions with assets greater than $50 billion and other hedge funds with assets of $10 billion or greater.

  • For the first time in its history, the law makes the Federal Reserve subject to Congressional audits.

  • Restricts the Federal Reserve's authority.

  • The Federal Reserve has been under scrutiny and criticized by legislators for the agency's fumbled management of the financial crises and massive credit card bailout program. The new law will restrict the Fed's authority in lending taxpayers' money to bailout these companies in the future. This provision mandates a two-third majority vote of the Council plus the Treasury Secretary's approval after the President has first stated an emergency exits period before a bailout program can be implemented. Any such bailout program cannot be provided to individual companies. Furthermore, Congress will have the authority to disapprove continued use.

  Shortly after the vote was finalized, Speaker of the House, Nancy Pelosi (D-CA) stated the vote is a clear message to credit card and financial organizations that "The party is over."
  
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