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President Obama Signs Financial Overhaul

posted on July 22, 2010


Hello, I'm Mark Pearson. Despite bearish reports this week on the U.S. economy, Wall Street trended higher.

According to the National Association of Realtors, sales of previously occupied homes fell 5.1 percent in June. The report came in the wake of a Commerce Department announcement that new housing starts plunged last month to their lowest level since October.

Meanwhile, new claims for unemployment increased nearly 9 percent last week to their highest level since February.

But upbeat earnings reports from Caterpillar, UPS, Microsoft and other companies buoyed investor sentiment and when the dust settled on Friday the Dow closed with a weekly gain of 325 points.

But even as investors celebrated the week's events on Wall Street, policymakers reveled in the triumph of reforms aimed at insulating the public from the effects of unbridled greed.

On Wednesday, President Obama signed into law the most sweeping overhaul of lending and financial sector rules since the Great Depression.

President Obama Signs Financial Overhaul

President Obama: "It was a crisis born of a failure of responsibility from certain corners of Wall Street to the halls of power in Washington. For years, our financial sector was governed by antiquated and poorly enforced rules that allowed some to game the system and take risks that endangered the entire economy."

Speaking to hundreds of triumphant Democrats and government officials, President Obama explained the foundation of sweeping financial reforms. Similar to the health care bill passed last year, the financial overhaul passed the U.S. Senate, largely on a party line vote. The victory ensures the President his second key legislative achievement.

The Senate's 60-39 vote guaranteed a presidential signature for a litany of regulatory objectives, including:

New federal powers to break up companies that threaten the economy.

Creation of a new consumer protection agency to guard financial transactions.

And fresh Congressional and Federal Reserve oversight into financial markets that previously eluded regulation.

President Barack Obama: "It will finally bring transparency to the kind of complex and risky transactions that helped trigger the financial crisis. Shareholders will have a greater say on the pay of CEOs and other executives so they can reward success instead of failure. And finally, because of this law, the American people will never be asked again to foot the bill for Wall Street's mistakes. There will be no more tax-funded bailouts, period."

The President's populist appeal against taxpayer funded bailouts comes with new rules that some critics call a "government overreach of unprecedented largess."

In a dose of irony, the new regulations were signed inside the Ronald Reagan federal building, named after the two-term President known for slashing regulations and championing limited government.

Republicans were largely absent from the public signing as House Minority Leader John Boehner (BAY-NUR) pledged to repeal the law. Boehner's Senate counterpart, Mitch McConnell of Kentucky, blasted the bill as a jobs "killer" set to harm the nation's economy.

Sen. Mitch McConnell, R-Kentucky: "When you cut through all the talking points about what financial regulation will do, the practical, real-world effect of this bill in the near term will be job loss. That's the real story here. For more than a year-and-a-half, the president and his Democratic allies on Capitol Hill have pushed an anti-business, anti-jobs agenda on the American people in the form of one massive government intrusion after another."

Despite Republican warnings and Democratic jubilation, the financial overhaul is only the beginning of a larger regulatory process.

Multiple mandates within the new law merely establish the framework or new organization in charge of financial oversight. The new Consumer Financial Protection Bureau, empowered to write and enforce regulations covering mortgages and credit cards, will first require a Senate-passed chief officer as it begins the arduous process of fresh consumer protections.

Despite the backslapping celebration by some Congressional lawmakers and the President, many Democrats confess the true test of new financial reforms will come in the face of America's next economic crisis.

 


Tags: banks Barack Obama Congress economy finance government news presidents reform