June 18, 2009


Wall Street isn't buying Obama's reform plan: Banks and other firms are quick to attack Obama's consumer-friendly overhaul of financial rules. The stage is set for a legislative battle, with Wall Street turning to allies in Congress. (Walter Hamilton and Jim Puzzanghera, June 18, 2009, LA Times)

Much of his reform package involves complex changes to the inner workings of the financial system, but Obama said that better consumer protection -- a priority -- was a key to avoiding future financial crises.

Such safeguards could reach far down the line to such everyday matters as bank overdraft protection. A new agency would have the power to write federal rules that, for instance, prohibit prepayment penalties on loans, require better disclosures, order financial companies to offer easily understood options, and levy fines and penalties for lenders that don't comply.

"The most unfair practices will be banned," Obama said. "Those ridiculous contracts with pages of fine print that no one can figure out, those things will be a thing of the past. And enforcement will be the rule, not the exception."

Consumer groups hailed the plan.

"This is a dramatic shift in the focus of financial regulation, which should lead to a credit marketplace which is easier for consumers to understand and safer," said Travis Plunkett, legislative director for the Consumer Federation of America.

But banks and other Wall Street firms that earn billions of dollars on consumer financial products quickly attacked the proposal, setting the stage for what is likely to be a hard-fought legislative battle.

Only a Hint of Roosevelt in Financial Overhaul (JOE NOCERA, 6/18/09, NY Times)
On Wednesday, President Obama unveiled what he described as “a sweeping overhaul of the financial regulatory system, a transformation on a scale not seen since the reforms that followed the Great Depression.”

In terms of the sheer number of proposals, outlined in an 88-page document the administration released on Tuesday, that is undoubtedly true. But in terms of the scope and breadth of the Obama plan — and more important, in terms of its overall effect on Wall Street’s modus operandi — it’s not even close to what Roosevelt accomplished during the Great Depression.

Rather, the Obama plan is little more than an attempt to stick some new regulatory fingers into a very leaky financial dam rather than rebuild the dam itself.

All bureaucracies become captive of the very people they're there to regulate.

Posted by Orrin Judd at June 18, 2009 5:53 AM
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