Although many supporters of tighter financial regulation believe the final reform bill unveiled Friday doesn’t go far enough, some see within it important new protections for consumers.
Members of the congressional financial reform conference committee announced a deal on what a final financial reform package will look like, reconciling differences between separate House and Senate versions of the legislation. The conference report is now expected to be taken up by the full House and Senate next week, and sent to President Obama to sign into law.
Obama has long sought enactment of new financial reforms to protect consumers, and prevent a repeat of the 2008 financial meltdown that resulted in trillion-dollar taxpayer-funded bank bailouts.
For some backers of strong financial reform, such as Sen. Bernie Sanders (I-Vt.), the legislative product doesn’t do enough.
“It is modest. It doesn’t go far enough,” Sanders says.
Particularly, the legislation wouldn’t break up huge banks, or cap credit card interest rates, he says. Sanders did note, however, the bill includes a Senate provision that he authored to authorize an audit of the shadowy and powerful Federal Reserve.
Other reformers view the conference report as a strong overhaul package to curb the worst abuses by banks. They, particularly, point to the protection consumers will be afforded by the creation of a new, independent federal Consumer Financial Protection Bureau.
“Without a doubt, the centerpiece of reform is the establishment of the new, independent Consumer Financial Protection Bureau with only one job: protecting consumers who buy financial products at banks and non-bank lenders, from mortgage companies to payday lenders,” says Ed Mierzwinski, consumer program director at U.S. PIRG, a Washington-based advocacy group that has pushed strong financial reform. “While the bureau will not regulate predatory car dealer practices, a last minute compromise gives the Federal Trade Commission new authority over car dealers who initiate loans.
“Final passage next week of the Wall Street Reform and Consumer Protection Act will help consumers and the economy recover from the financial meltdown that cost millions of jobs and trillions of dollars in home and retirement fund value,” Mierzwinski adds.
Michael Calhoun, president of the Center for Responsible Lending, says he is especially pleased the new consumer bureau will be an independent body.
“Today, House and Senate conferees reached a historic agreement to create a consumer protection agency that is truly independent from the lenders it will oversee: It will have a single director nominated by the president and confirmed by the Senate; funding that is largely insulated from meddling by industry lobbyists; and the tools and scope needed to ensure most lenders operate under one set of common-sense rules. That’s a win for families, small businesses, taxpayers and the economy,” he says in a statement released Friday.
“Lawmakers began this process more than a year ago, and while there is more work to do, this new agency will be the keystone for reforms to make us all safer from lending abuses, including those that sparked the current financial crisis,” Calhoun adds.
A new independent consumer financial protection agency would consolidate and give teeth to existing consumer-protection authority now scattered among, but largely ignored by, existing financial regulators, says Calhoun, who heads a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices.
“We think this new entity will usher in a new era of oversight, where unfair practices are stopped before they become pervasive and possibly trigger the need for another taxpayer-funded bailout,” he says.
The conference report also contains stronger foreclosure prevention by including an emergency loan fund to help families at risk of losing their home because of unemployment or illness, Calhoun says.
The president of the venerable Teamsters labor union, too, urged final passage of the financial reform bill.
“This is a landmark bill that will help redirect bank capital toward creating jobs instead of destroying them,” says Jim Hoffa, the union’s general president. “It makes progress toward bringing back Glass-Steagall, which forbids traditional commercial banks from taking risks with other people’s money.
“While not perfect, this conference report protects consumers, imposes some restrictions on executive compensation and regulates derivatives and private equity. I urge lawmakers to pass this important legislation,” Hoffa adds.
The publisher of the news site On The Hill, Scott Nance has covered Congress and the federal government for more than a decade.