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Ear to the Ground

House Passes Major Financial Regulation Bill

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Posted on Dec 11, 2009
NYSE
AP / Henny Ray Abrams

A statue of George Washington on the steps of Federal Hall overlooks the New York Stock Exchange.

In what is being hailed as the biggest bid to change financial regulation since Franklin Delano Roosevelt’s New Deal, the House of Representatives on Friday passed the Wall Street Reform and Consumer Protection Act of 2009. The legislation now moves to the Senate. In a press conference after the vote, House Speaker Nancy Pelosi proclaimed, “We are sending a clear message to Wall Street: The party is over.”

Is the party, in fact, over? And what impact might the new legislation have on consumers, banks and homeowners? The Associated Press whipped up a handy Q & A article (click here) to address these questions. —KA

AP via Google News:

The sprawling legislation would give the government new powers to break up companies that threaten the economy, create a new agency to oversee consumer banking transactions and shine a light into shadow financial markets that have escaped the oversight of regulators.

The vote was a party-line 223-202. No Republicans voted for the bill; 27 Democrats voted against it.

While a victory for the administration, the legislation dilutes some of President Barack Obama’s recommendations, carving out exceptions to some of its toughest provisions. The burden now shifts to the Senate, which is not expected to act on its version of a regulatory overhaul until early next year.

The president praised the House action Friday, and called on Congress to act swiftly to get the bill to the White House for his signature.

“The crisis from which we are still recovering was born not only of failure on Wall Street, but also in Washington,” Obama said. “We have a responsibility to learn from it and to put in place reforms that will promote sound investment, encourage real competition and innovation and prevent such a crisis from ever happening again.”

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By truedigger3, December 13, 2009 at 6:13 am Link to this comment

JimBob wrote:
“Republicans might as well just merge with the Chamber of Commerce; they no more serve their flesh-and-blood constituents than the swine flu does.”
____________________________________________________

JimBob,

There is no difference whatsoever between the Republican and Democratic parties. Both are two different masks for the same party which is the moneyed/corporate elite party.
Each mask serves very well at specific time or occasion.
Just look at Obama performance, he is doing nothing different than W Bush was doing and he is rolling on the same tracks W Bush was rolling on.
Obama is worse because he misleads and deceives by his blackness, skillful oratory, charisma and toothpaste smile.
He is implementing the same policies W Bush was implementing with minor changes on the fringe issues coupled with posturing, theatrics and make-believe changes without any substance to it.

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By JimBob, December 12, 2009 at 7:17 pm Link to this comment

Republicans might as well just merge with the Chamber of Commerce; they no more serve their flesh-and-blood constituents than the swine flu does.

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By thebeerdoctor, December 12, 2009 at 4:37 pm Link to this comment

Thanks to the t-shirt doctor for providing a valuable link. Found this by William Greider, published in The Nation, December 8, 2009:
“The sales pitch for financial-reform legislation in the House claims it would put a stop to “too big to fail” bailouts for the leading banks. The reality is the opposite. The federal government would instead be granted unlimited authority to spend whatever it takes to prop up the big boys when they get in trouble. Only in the next crisis, Congress won’t have to be asked for the money. The financial rescues will be funded by the secretive Federal Reserve, not the Treasury, with money the Fed itself creates.”

Then there is always those irritating comments from Nomi Prins, former managing director at Goldman Sachs, who continues to point out the multi-trillion dollar fraud that continues unabated. Back in September she wrote of the financial rescue: “They brought Wall Street back from capital starvation and prevented the possibility of more big banks going bankrupt—instead of the slew of smaller and mid-size ones that have since met the fate of Lehman Brothers.”
Those “too small to save banks” is, as of last Friday. up to 133. The FDIC has to scurry in like an over-taxed janitor, with not enough cleaning supplies. Of course these bank failure get reported in the news, but hardly anyone pays any attention.
Like the recent announcement from Goldman Sachs about suspending executive bonuses, this House financial reform bill is really just public-relations damage control. Again, as Ms. Prins has pointed out about Goldman: “The firm posted a record profit for the second quarter 0f 2009 and did almost as well during the third quarter. This was while on $43.4 billion in government subsidies. not including the $10 billion TARP repayment.”
But lastly, this sentence about Goldman Sachs, could easily apply to this incredible pile of worthless cards, commonly referred to as our financial system:

‘The firm’s profits, indeed its existence, are predicated on two things: federally subsidized capital and taking risks with it.”
    NOMI PRINS

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By Anarchist, December 12, 2009 at 2:31 pm Link to this comment
(Unregistered commenter)

Time for a revolt! Major Taxpayer strike! Stay home strike until the big banks are dissolved. This is what needs to happen. Taking my monies out of 401k and commercial banks. Putting them in credit unions or under my pillow….everyone must do this or they win!

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By truedigger3, December 12, 2009 at 2:15 pm Link to this comment

For a starter the law didn’t re-enstate Glass-Steagall act seperating investment banking from commerical banking and did not regulate hedge funds or ban short selling of stocks and the other shenaningans like credit default swaps etc etc.
All the elements that caused the current debacke are still there in place alive and well.
I am not a lawyer or an accountant, but I bet the law is just another make-believe bullshiting from Team Obama and it is loaded with loopholes. Nothing in the new lawto prevent the current debacle from happening again and in the near future.
The foxes got used to the easy available preys and will try again in the very near future, hey, why not, they dug a tunnel to the middle of the hen house!!.

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By Amon Drool, December 12, 2009 at 1:07 pm Link to this comment

last nite i tried reading the taibbi article and i couldn’t make it past the first couple paragraphs.  taibbi seemed to be writing under the assumption that obama had somehow been recently been captured by financial interests.

remember his ‘private’ speech last winter to well-heeled san francisco fund raisers?  he included those who had doubts about ‘free’ trade with those who could not handle ‘modernity’...like gun and bible toters.  he had made his way in either 2007 or 2008 to a dem business group called the hamilton project, a group started under the guidance of robert rubin.  he pretty much endorsed their point of view in his address to them.  remember his senate vote not to put a cap on usurious interest rates?  remember his vote on paulson’s tarp give-away?

in 2008, when the dem nomination came down to hillary and obama, wall street knew it was still in the saddle.  the nomination had become a battle between dlc east—hillary—and dlc chicago—obama.  for more on the chicago dlc branch, headed by obama, emmanuel, richard daley and melissa bean, google “melissa bean’s backers are key obama associates”

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By glider, December 12, 2009 at 12:29 pm Link to this comment

I will restate this one more time as I think it is the critical point condemning the bailout as absolutely corrupt.  Geitner/Paulson contend that the taxpayer had no choice but to bailout the Banksters at full face value for their toxic assets.  Since this is gifted money that contention makes no sense whatsoever.  It does however serve to shelter Paulson and the other Banksters from criminal prosecution by making the investors whole at the expense of the taxpayer.  This makes Paulson and Geitner racketeering criminals plain and simple IMO.  The lack of prosecution is a testimonial to the complete corruption of our government at this point in time.

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By glider, December 12, 2009 at 12:08 pm Link to this comment

beerdoctor and ardee,
I agree with you both.  I was trying to explain the mindset of the corrupt Paulson (aka Bankster) in what he/they were thinking in the execution of the “bailout” or bankster fraud coverup (IMO).  Beerdoctor, I to think this Rolling Stone article drives home the point of the complete state of corruption our “government” better than any other article I have read on the subject.  It is a must read for anyone who desires to be a responsible citizen.  The implicit comdemnation of the mechanics of our “system” and the Obama sellout is complete and without question.  Kudos to Matt Taibbi for bravely presenting the truth in detail against the cowardly background of MSM corporatocracy silence.  I wish TruthDig could approach his level of competence in media coverage.  That is something they lack yet should aspire to IMO.

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By ChaoticGood, December 12, 2009 at 11:55 am Link to this comment

America has always been the “home” of swindlers, hucksters, snake-oil salesmen, carnival barkers and marketeers.  We revel in the banality and secretly applaud the “Bernie Madoffs” in our society.  As a very wise commedian once said, “Comedy is inversely proportional to distance”.  Americans have always believed that they were charmed and special and somehow “distant” from the ravages of the unregulated “free market”.  Now we are learning the hard way that any system that rewards the “slick” over the productive will bring ruin.  Strangely and ironically, Fox News is the documentarian of America’s slide into ignominy.

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By A Citizen, December 12, 2009 at 10:08 am Link to this comment
(Unregistered commenter)

Fuck this crooked American Government.

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By thebeerdoctor, December 12, 2009 at 9:53 am Link to this comment

“There’s no other way to say it:Barack Obama, a once-in-a-generation political talent whose graceful conquest of America’s racial dragons en route to the White House inspired the entire world, has for some reason allowed his presidency to be hijacked by snileving, low-rent shitheads.”
MATT TAIBBI, from the Rolling Stone article

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By ardee, December 12, 2009 at 7:39 am Link to this comment

I am no lawyer I assure you, but neither do I echo Dickens in his assumption that,“the Law, sir, is an ass”. The Law is a tool and an echo of the morality, if you will, of the society it serves, or fails.

I think, from my layman’s perspective, that prosecution need not be tied to investor dissatisfaction though I concede that salving their wounds deflated protest from that arena at least. I was supporting, or rather criticizing the lack of, prosecution from government impetus.

I thank beerdoctor for the link to an excellent article.

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By glider, December 12, 2009 at 5:04 am Link to this comment

To reword this point.  The investors would of sued the banks, would not of recovered all their money, and the bankers would then by implication have be guilty of defrauding these investors out of that unrecovered money, and then be subject to criminal prosecution.  The out was to have the taxpayers back up these toxic assets at full face value.

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By glider, December 12, 2009 at 4:42 am Link to this comment

I agree that the investors would not have recovered anything near all their money.  Everyone knows that is typical for investor lawsuits.  However, keeping the lawyers out of it was perhaps ample reason for someone like Paulson to threaten Congress to cough up the bucks or face financial Amegeddon in spite of his own motivations.  And to make sure that the investors were backed up for full face value by the tax payer may accomplish his and his bankster friends goals of avoiding criminal prosecution.

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By ardee, December 12, 2009 at 4:12 am Link to this comment

I think your point valid, but suing bankrupt firms would have been a useless strategy. AIG, the insurer of record, could not possibly have paid out had the courts actually heard and agreed with said lawsuits.

I think we have created and nurtured a system in which this can and will happen again, and again, and in new and clever ways. The people who perpetrated this fraud against this nation and the world belong in jail, will never see the inside of one I understand, and thus are free to wallow in their ill gotten gains and plan further such schemes.

I post only to show how badly we need a new system.

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By glider, December 12, 2009 at 3:56 am Link to this comment

Ardee,
It has been said that the real reason behind the bailout was to prevent bond investors from suing the Banks and forcing them to buy back their “AAA” fraudulent toxic loan packages at full face value.  This would have fairly put huge liabilities onto the responsible banks, revealed the full extent of their shenanigans, and opened the way for criminal prosecutions of the people responsible for the racketeering (included one key big time perpetrator, Henry Paulson).

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By ardee, December 12, 2009 at 3:23 am Link to this comment

The single best tool in the govts arsenal visavis crime in the financial community is the justice system. What effect will new legislation have when there have been no investigations, no prosecutions and no convictions?

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By glider, December 11, 2009 at 11:00 pm Link to this comment

The concept that a corporate lobbyist ridden Congress and Executive Branch headed by a Wall Street Sellout Obama would fashion effective regulatory controls to protect the Public is not reasonable.  So follow the money to see how effective our “representatives” have been once they shit out a final bill.  Will the share price of the big banks drop in half or more upon passage?  Will the abusive derivatives mark drop 80% plus?  I won’t be reading what is surely to be a horrendously complex bill riddled with legal loophole-ease, but I will be looking for the actual effect on these monsters in our midst.  I don’t expect anything to change and don’t trust this cast of characters in control one bit.

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By Aarky, December 11, 2009 at 8:25 pm Link to this comment
(Unregistered commenter)

Did they cancel the Commodities Reform Act of 2000? Did they re-institute the Glass-Steagal Act and cancel the Graham-Leach-Bliley Act of 1999? If not the taxpayers will be hosed again by the hedge funds and the wall street crooks within another ten years when they create another financial disaster.

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