Questions, answers on Wall Street bill
By ConnPolitics.tv Staff on Dec 11, 2009 | In News, Washington D.C. - Congress | 20 feedbacks »
Washington (AP) – The House passed legislation Friday governing Wall Street, the biggest overhaul of laws covering banks and other financial institutions since the New Deal. Senate action is expected early next year.
Some questions and answers on the bill:
Q. Who does it affect?
A. Financial institutions, both banks and nonbanks; homeowners, borrowers and credit card holders; insurance companies; hedge funds; traders in complex derivatives; and securities rating companies.
Q. How would it avoid another Wall Street crisis?
A. It creates a Financial Services Oversight Council made up of the Treasury secretary, the Federal Reserve chairman and heads of regulatory agencies. The council would monitor the financial markets to watch for potential threats to financial system. It would identify firms and activities that should be subject to heightened standards, including requirements that they place more money in their reserves. Companies would have to plan for their own demise, detailing how they would be dismantled if they fail. The government could dismantle even healthy firms if they are considered a grave risk to the economy.
Q. Who would pay for a failing firm?
A. Failing banks are dissolved now by the Federal Deposit Insurance Corp. The legislation proposes that the costs of large nonbank institutions that fail first be paid for by shareholders and creditors. Even secured creditors would have to take a hit, losing up to 10 percent of their security. If the failure still has damaging financial repercussions, the FDIC would tap a special $150 billion fund paid for by large institutions with $50 billion in assets or more, or hedge funds with at least $10 billion in assets.
Q. What are consumers likely to see?
A. The legislation creates a Consumer Finance Protection Agency that would oversee consumer lending – mortgages, credit cards, payday loans and terms on savings accounts. It would take consumer regulation and enforcement powers away from bank regulators. Under current law, states cannot supersede federal consumer laws, but the legislation would permit states in some instances to impose tougher consumer laws on financial institutions. Banks could escape state laws by claiming they “materially” impair the business of banking. Several industries would be exempt from CFPA oversight, including retailers, auto dealers, lawyers and accountants.
Q. What else does it do?
A. It brings the unregulated $600 trillion derivatives market under government oversight. Derivatives are complex financial instruments, such as credit default swaps, blamed for accelerating the Wall Street panic last year. Some companies that use them to hedge against risk from new requirements in the overhaul legislation would get exceptions. So would companies considered too small to pose a risk to the financial system. The Obama administration did not want the exceptions and consumer advocates say they give Wall Street a break. Hedge funds, which operated in shadow financial markets, would have to be registered with the government.
Q. What about those executive salaries?
A. Company shareholders would get a nonbinding vote on the pay of top executives. Federal banking regulators would have to approve compensation practices, though not actual pay, at banks and bank holding companies.
20 comments
the "casino investments" they have been doing all along has cost this country PLENTY.......
the question IS...does the pathetic congress have the "balls" to do anything BUT "talk" about it ?????
There HAS to be some oversight in that industry.......
this economic downturn need not be this severe if these dirtbag firms were actually "watched"........
phony stock....phony stock prices...."over valued" stock.... all that is just the tip of the ice burg.....
not to mention in the past couple of years, if a company has HUGE loss's....MILLIONS are STILL given as "bonus's" to people........just what ARE you rewarding?????? its ALL BS...............
The way we practice "capitalism" now is pathetic and a disgrace.....its no wonder that most people ( including myself) now are questioning this "belief"....
So tell me...THAT is what happened here????
LOL
PLEASE Wall ST vermin...DO "NOT" do what you do best...........
and it isnt.............
"davy"...you should be the last one to claim others lack knowledge. The relationship between Wall St, investing, and job creation, was broken long ago....you must be Rip Van Winkle....
To remind those who are so selective in their reasoning, it is the left wingers in government that forced the banks to provide risky investments of home loans. Wall street provided cover for those bank in the form of derivatives and other forms of risky investments.
In short the government is the problem not wall street. The government has hundreds of regulations not to mention thousands of people watching the banks and investment community. The left wing politicians forced those people to overlook the risky and shady ventures- not to mention the laws that were changed to allow for this melt down. Albeit they did send to few to jail.
The system works only when the politicians let it work.
Equating the remedying of Wall St thievery with "socialism",
is the very dynamic that will enable them to persist. Proper regulation to return Wall St to a supporter - as opposed to a destroyer - of economic health has to come from somewhere. Remember, their enourmous pay -
with no value creation - can
only hasten the deterioration of the dollar. This isn't hard work, so much as being part of an enabled, closed club of wealth re-distribution.
" I wonder where is the outcry for the high salaries of the entertainment and sports industries."
There is, and has been outcry. There are many who feel that some of someone like Tiger Wood's enourmous windfall, would be better directed to both the real producers of the endorsed goods, as well as lower prices for the consumer.
"it is the left wingers in government that forced the banks to provide risky investments of home loans. Wall street provided cover for those bank in the form of derivatives and other forms of risky investments."
This is - at best - a partial truth. No one requested that underwriting standards be thrown away in the process. And Wall St licked their chops all the way on this, and left everyone else holding the bag
after they cashed in BIG.
In short, Wall St apologists are likely the most dangerous folks out there these days. Government and Wall St are really one of the same, as govt enabled Wall St's thievery by blowing away all the regulation that was previously put in place
for good reason: to avoid what we have now. Any working person with children should be beyond outraged at this point.
As President Reagan explained in the '80's "Government is the problem."
I certainly agree. But the ultimate question is how can
Wall St be returned to place of investment in value creation and innovation, from its current status - one of insatiable speculation....
Please Explain:
1. The failure of Lehman Brothers and AIG.
2. The near "crash" of the stock market.
3. The Unemployment rate.
4. The profits and continued layoffs at Wall St. Firms.
"he government has hundreds of regulations not to mention thousands of people watching the banks and investment community."
The majority of regulations were stripped away beginning in the 1980's. The final nail in the coffin was handed down under Clinton. And you see where that got us.
"The Democrat control of Congress is a very bad thing for our way of life because of their spending and more regulatory control."
You seem to ignore the spending of the previous administration...
The Republicans keep saying that Government has to stay out of the way of business so they will remove the regulations that insure that business plays the Capitalism Game in a way that is fair and reasonable and good for the Nation.
Furthermore, under Clinton the Republican congress pushed for and approved the Financial Services Modernization Act of 1999 would do away with restrictions on the integration of banking, insurance and stock trading imposed by the Glass-Steagall Act of 1933, one of the central pillars of Roosevelt's New Deal.
At this time the chairman of the Senate Banking Committee, Texas Republican Phil Gramm, himself collected more than $1.5 million in cash from the three industries during the last five years: $496,610 from the insurance industry, $760,404 from the securities industry and $407,956 from banks.
...Isn't this ironic Davy?
http://www.youtube.com/watch?v=_MGT_cSi7Rs
That makes no sense Davy, as the biggest infringement on our rights in the past 50 years was the Patriot Act, drafted and approved by a Republican you voted for.
"If you substitute left wing with Communist, it will be easier to understand their BS."
I'm not a Communist nor a Capitalist. People like you, and your generation with its greed and "me first" ideology have destroyed this country. Look at the past 8 years, look at the 1980's - greed. Step on the little man to get rich.
How could you think there wouldn't be a backlash. I'm in my early 30's and my generation doesn't see eye to eye with yours, and thank God. It's time for you people to hand over the mess you created to us and rather than force us to wallow in it, let us fix it.
James Madison, Federalist No. 51, February 8, 1788
We need a heightened level of precaution with Obama and the left wing Democrats in control....
James Madison, letter to W.T. Barry, August 4, 1822
We have real problem with our popular media these days with their heightened embrace of Obama and the left wingers.
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