President Obama proposed this reform in June, 2009, in order to stop the 2008 global credit crisis from every happening again. The house passed the Financial Regulatory Reform bill, very similar to what the President had proposed on Friday, June 25th. Two republicans and all by two democrats voted to pass the bill.
There are three basic steps:
1. Regulators receive more power to monitor everything from mortgages to securities.
2. Financial firms are forced to reduce the debt they take on and hold more capital in reserves.
3. If a financial firm is collapsing, the government can seize it, similar to now, they are authorized to seize traditional banks.
The bill will put government in charge of Wall St.. There will be a nine person board, led by the Treasury Secretary. It also puts the President of the United States in charge of appointing the President of the Federal Reserve Bank of New York, not by a board of member bank representatives as done in the past. It also creates a new Consumer Protection Bureau, although the auto dealers won an exemption from this oversight, which will regulate most consumer loans.
After a 20 hour, all night session, which included last minute rapid fire votes from confused lawmakers, last minute deals cut in conference rooms and private discussions between the Obama administration and democratic lawmakers, Friday morning the bill was complete but left people wondering what was and was not in the bill. The bill will go to the senate on Tuesday for a vote, as the President expects to sign it on the July 4th.
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