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Friday, December 11, 2009

House Passes Bill on Financial Regulation

The House passed legislation today on regulation of the financial industry:

House Passes Far-Reaching Bill Tightening Financial Rules, by Carl Hulse, NY Times: The House on Friday approved a Democratic plan to significantly tighten federal regulation of Wall Street and the financial sector...
The bill’s principal provisions establish a process for dismantling large, failing financial institutions; set up a council to identify and regulate firms that are so big, interconnected or risky that they need heightened supervision to keep them from bringing down the whole financial system; create a new consumer financial-protection agency to squelch unfair and abusive practices; and for the first time, regulate over-the-counter derivatives markets. The bill also contains provisions on executive pay, investor protection, credit ratings, hedge funds and insurance.

However, the bill still has to pass the Senate:

Despite the House action, final legislation is not imminent. The Senate is still developing its own measure for debate early next year and any Senate bill is likely to have substantial differences from the House measure, necessitating further negotiations. ...

And the legislation still has to get by an important constituency for politicians:

In preliminary votes ahead of the measure’s approval, lawmakers scaled back the bill’s ambitions slightly in ways that may increase its chances of overcoming objections from powerful financial interests. ...

I'll keep my hopes up, but given lawmakers attention to "powerful financial interests," something that will certainly (and disconcertingly) influence the Senate bill as well, I'll wait to see what emerges from the Senate before concluding that this is the road to any type of fundamental regulatory change.

    Posted by on Friday, December 11, 2009 at 02:16 PM in Economics, Financial System, Politics, Regulation | Permalink  TrackBack (0)  Comments (18)


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