President Barack Obama outlined his requirements for Wall Street reform for the kingpins of Wall Street on Thursday in New York. Obama presented principles aimed at preventing financial catastrophes such as the recent recession from happening in the future.
His speech was timely, coming one day before the Securities and Exchange Commission filed suit against Goldman Sachs for fraud.
The first of Obama’s desired reforms was the institution of a system to protect taxpayers from future bailouts when large institutions show signs of failure.
This system would establish a Consumer Financial Protection Agency, the purpose of which it would be to protect consumers and regulate providers of financial products and services.
The second requirement was the imposition of the Volcker Rule, which applies restrictions on banks that prohibit sponsoring, ownership and investment in risky trade operations and funds without relation to the banks’ customers.
Obama’s third requirement was to set standards of transparency upon financial tools such as derivatives, credit default swaps and other complicated financial innovations.
A fourth requirement was the assurance that consumers and investors would be protected from financial abuse. In cooperation with the creation of the CFPA, Obama’s plan would strengthen the Financial Services Oversight Council and establish a Financial Consumer Coordinating Council.
The fifth requirement would restructure the powers investors and pension holders have on the people who run their companies and how they are compensated.
Republicans were going full-speed in efforts to block any debate of reform almost immediately after Obama finished his speech. Sen. Mitch McConnell, R-Ky., led the efforts to filibuster the reform debate.
The battles regained their usual tones, with Republicans accusing Democrats of speeding through vote processes and Democrats accusing Republicans of obstructing or stalling progress.
One of the problems McConnell addressed was the proposal of a $50 billion fund he referred to as a bailout fund.
The truth of the matter is that it is not a bailout fund paid for by the government — the fund is paid for by corporations in order to provide protection to consumers during banks’ demise.
Moreover, the fund is something the Obama administration opposes as well due to fears that it could further complicate the bankruptcy process.
The debate over potential legislation seems to get more bipartisan support than the debate over health care primarily because the effects of the recession are still fresh in the minds of Americans everywhere.
The charges against Goldman Sachs have also energized debates amongst members of Congress who are trying to appeal to voters for the upcoming midterm elections.
Wall Street reform needs to be passed, and it needs to address the concerns of the taxpayers — safety from fraud and protection against bearing the burden when the financial industry screws up.
The plan Obama outlined accomplishes many issues related to those concerns. Any legislation should establish laws that protect the economy from the types of catastrophes America suffered in 2008 and 2009 and will hopefully provide a lesson for companies on Wall Street on excessive risk taking.
Andrew Taylor is an economics senior and may be reached at [email protected]
Opacity reduces scrutiny and confers power on the few with the ability to pierce the veil. Although derivatives have indeed become extremely complex, in actuality, they are as old as the idea of finance itself. The credit derivatives market should borrow a thought from Leonardo: “Simplicity is the highest form of sophistication.”
For a clearer understanding of subprime mortgage-backed credit derivatives, visit:
http://donovanlawgroup.wordpress.com/2010/02/19/how-credit-derivatives-brought-the-u-s-economy-to-the-brink-of-a-second-great-depression/
Democrat talking point after Democrat talking point; and not to mention a continued rhetoric of assuming that his audience is nothing more than complete idiots — that’s our Andrew Taylor. Given Comrade President Obama’s history so far, any speech on Wall Street at this point is just a set-up for an eventual government tax over of that industry. Any business or economic major in their right mind would know that; hence we get this drivel from Andrew today.
Nothing is “timely” or coincidental in politics, but Andrew presents his case as if our Dear Leader was just informed off this so-called “Wall Street Scandal” and rode into to save the day, when Taylor damn well knows, or should know that this fiasco goes all the way back to Carter and Clinton, with their Community Reinvestment Act propaganda; and don’t forget Barney Frank. He is naked as a jaybird in all of this mess that has not been properly vetted at all.
One thing that UH readers, I mean those few intelligent few that are able to dissect Taylor’s recordings as tripe, should know that he just gives us information as if we are liberal slaves in line for the offering of government crumbs. Its just that … information. He does not attempt to break it down or offer any real or insightful analysis, because if he did go the extra mile, he would show himself to be what he really is — a Fraud.
Gilligan is soiling his nose in any persons posterior that will get him to the next level. He sees himself as one of the future elite in our new socialist society, where the Blacks and the Hispanics will just get by on those non-prosperious government crumbs with no hope for future self-sufficiency, but he and the other white crony capitalist government and union leaders will have the best of everything.
One question Andrew. How many Obama officials were formers “workers” at Goldman Sachs? And do you really think GS is gonna be punished? The answer of course is many, and besides a small fine Goldman will get off free, and Obama may well control Wall Street.
…. and the downfall of our Democracy continues. As contributed by Andrew Taylor.