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Financial Reform Bill Passes in Senate, Goes to President

 

Law Books The Dodd-Frank bill (HR 4173) passed by a vote of 60 to 39 in the Senate today and will be forwarded to the President. The financial reform bill, named for Senator Dodd and Representative Frank, its initial authors, aims to tighten financial regulation in order to avoid another economic crisis like that of 2007-2009. While the bill is supported by many Democrats, some Republicans are unhappy with it, claiming that it does not address the housing market problems which initiated the financial crisis and that the impacts of the bill are still questionable. The President hopes to sign the bill into law next week and the Treasury is already preparing for its implementation.

The bill will improve the False Claims Act once again by providing further protection for Security and Exchange Commission (SEC) and Commodities whistleblowers.

Despite the fact that the bill has passed, recent polls have shown that citizens are unsure of who the bill protects—them or the financial industry. In a Bloomberg poll published July 13, around half of those polled answered that the bill serves to protect the financial industry, while only 38 percent thought the bill was to protect them.

Despite this questionability as to which the bill protects more, the bill is intended to protect both. According to Reuters, “The legislation would establish new consumer protections, give regulators greater power to dismantle troubled firms and limit a range of risky trading activities in a way that would curb bank profits.” Senator Durbin agreed that the bill protects both consumers and the financial industry stating that the bill “‘substantially reduces the risk the financial markets will cause the economy to implode again, and it empowers consumers and small businesses to make better financial choices.’” The new bill is two-pronged, protecting the financial market from another collapse, which inevitably protects the consumers from suffering the affects of another collapse.

Deloitte has written a comprehensive overview of the bill (accessible here) and highlights the bills main two points: to “‘De-risk’ the financial system by constraining individual organizations’ risk-taking activities and capturing a broader set of organizations’, including the so-called ‘shadow’ banking system, in the regulatory net” and to heighten consumer protection. Deloitte further explains seven implications of this “de-risking” combined with consumer protection bill, which are analyzed in depth, and can provide more information to the public on the impact of the bill.

Sources:
Deloitte. “Assessing the Impact of U.S. Financial Regulatory Reform.” 2010. http://www.deloitte.com/view/en_US/us/industries/Real-Estate/d93c1131bb389210VgnVCM100000ba42f00aRCRD.htm.
Deloitte Center for Financial Services. “The sound of rumbling thunder: Assessing the impact of U.S. financial regulatory reform.” 2010. http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/FSI/us_fsi_financialreform_rumblingthunder_july2110.pdf.
Sullivan, Andy and Kevin Drawbaugh. “Wall St reform passes, goes to Obama for signing.” Reuters. 15 July 2010. http://www.reuters.com/article/idUSN1536737720100715.

 
 
 

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