President Barack Obama signed the Wall Street Reform and Consumer Protection Act at the Ronald Reagan Building in Washington D.C. on July 21, 2010. The 2,300 page bill has 16 titles and 383,000 words. The purpose of the bill, according to lawmakers, is to “hold Wall Street accountable” – “so that it would never happen again.” The majority of the nation, however, does not believe that. The new law has 533 new regulations that will in the immediate term end in anxiety, confusion, and uncertainty for individuals and the nation’s many small, struggling businesses.
Congressional leaders from the House of Representatives and the Senate were anxious for the bill’s passage. Introduced as H.R. 4173 on December 2, 2009 by Congressman Barney Frank (D-MA), the House Financial Services Chairman, and Senator Chris Dodd (D-CT), the Senate Banking Committee Chairman, the reform bill was hoped to avert another collapse of the financial sector and the national economy – “so that it would never happen again.” The Senate passed the bill with a final 60 to 39 vote on July 15 and was reported as the Restoring American Financial Stability Act of 2010.
Passage of the bill into law preempted the relevance and findings of the Financial Crisis Inquiry Commission. The 10-member commission met 15 days between September 17, 2009 and July 1, 2010. The commission’s chair Phil Angelides is scheduled to report the causes of the financial crisis to the White House, Congress, and the American people on December 15, 2010. The purpose of Angelides’ report is to provide input on corrective legislation as the Pecora Commission’s Ferdinand Pecora said during the Great Depression – “so that it would never happen again.” The Financial Crisis Inquiry Commission served as a diversionary side show for public consumption via C-Span while the real work on financial reform took place between K Street and Capitol Hill. Among the many sensationalistic media-driven diversions that further deflected public attention away from finance and the economy was “negro phobia” in America, the anticipated lesbian prison gang rape of Lindsay Lohan, and the apocalypse in the Gulf of Mexico.
There are many good provisions in the bill. The best aspect of the bill is the provision to permit the free market to work and allow mismanaged financial firms to fail rather than risk tax payer money and bloat the federal deficit. President Obama said,
“Because of this law, the American people will never be asked again to foot the bill for Wall Street’s mistakes.”
The nation has heard it too many times – “so that it would never happen again.” The President’s assuring remarks did nothing to avert the Tea Party’s sight set on November’s mid-term elections. Individuals in the Tea Party found common ground as a result of the $700 billion Wall Street bailout that caused the Panic of 2008. That resulted in nationwide fear and anger that has not subsided.
The Federal Reserve’s expanded role in the Wall Street reform bill, however, is not one of the bill’s good provisions since the new Bureau of Consumer Financial Protection is embedded in the agency that also has obligations to its shareholder banks to maximize profits. Title XIV, or the Mortgage Reform and Anti-Predatory Lending Act, reiterates an existing array of regulations while claiming to legally define predatory lending practices and characteristics. This title does not legally define predatory lending, but it takes steps in the right direction. For example, this title states that an arbitration provision or any other nonjudicial alternative is prohibited in settling any claim that stems from a mortgage loan application. That is good. But, this title only warns homeowners of foreclosure rescue scams to be on the alert while not further deterring scammers with increased penalties. Finally, this title does not prohibit loan servicers from continuing usage of ambiguous and one-sided loan modification contracts with terms that present no financial benefit or relief to borrowers other than providing shelter.
The shareholders of the Federal Reserve are the same too big to fail banks that crashed both the national and global economy. Moreover, nothing was done to address the too big to fail banks by cutting them down to size. Instead, they remain zombie banks, drags on the real economy, and impediments to consumer and mortgage lending.
Washington, D.C. area businesses will not be positively impacted since the city is not a financial center. It is a legislative and administrative center, and the bill expands the role of administrative oversight over the economy. The real beneficiary of the sausage mill called the legislative process is the K Street corridor of public relations and law firms, high-end restaurants like Morton’s, and the underground high-end sex industry that from time-to-time makes it into the newspapers to then tarnish the reputations of the nation’s elected representatives.
The mainstream media as well as the many think tanks in Washington, D.C. for the most part rendered banal assessments of the Wall Street reform bill with the exception of FOX News. Glenn Beck, true to form, called it a “crap sandwich.” In an interview with Senator Orin Hatch (R-UT), Beck and Hatch affirmed their belief that Obama was dangerous for the country and that the bill held Wall Street, Fannie Mae, and Freddie Mac harmless.
Center for Responsible Lending, Consumer Federation of America, and the American Association of Retired Persons supported the bill. National Association of Federal Credit Unions and the American Bankers Association opposed the bill. Only 37 percent of those polled on OpenCongress.org, a bill tracking website, approved of the reform bill. A stunning 72 percent of readers of The Wall Street Journal, gave the bill either a grade of a D or an F. That stiff opposition was due to readership alignment with financial sector interests. An Associated Press poll revealed that 64 percent of the general population was not confident that the new bill would prevent another financial and economic meltdown. That no confidence vote is at a minimum due to the nation’s too big to fail banks and no audit provision of the Federal Reserve.
The bill will do absolutely nothing for new home construction, which is a crucial economic indicator and benchmark for economic recovery. In the Washington, D.C. area as in any other area the construction and sale of one new home produces about 40,000 jobs. The actual unemployment rate for the nation remains over 16 percent. Many of the nations’s unemployed worked in different aspects of the housing industry.
Sources included: Wall Street Reform and Consumer Protection Act, The White House, House of Representatives, U.S. Senate, OpenCongress.org, GovTrak.us, Financial Crisis Inquiry Commission, National Public Radio, The Wall Street Journal, MoneyNews.com, CBS News, Associated Press, FOX News, The Christian Science Monitor, The Washington Post, Washington Times, Center for American Progress, and Center for Responsible Lending.