Financial Reform

I have been reading articles on what is, and what is not, included in this new law. Not a single article agrees this is real reform.  It still gives Wall Street (SEC) and big banks the freedom to do what they want. This is not good. It's what I've been saying all along. 

The idea of financial reform was supposed to stop the abuse, but it may give the above more free rein in what they do. 

I'm posting one article from MSNBC. Please be sure to read the full article to get the full picture, not just skip over sections. A few paragraphs that popped out at me:

"...Under the new law, banks and other financial institutions will be overseen by a council of  regulators. That group will be charged with identifying the kinds of “systemic” risks that spun out of control in the collapse of Bear Stearns and Lehman Bros. in the financial panic of September 2008. 

But there’s little to be gained by entrusting that task to the same regulators who failed to spot the causes of the panic the first time, said Isaac, the former FDIC head.

“If a bank went to the regulators and said, ‘We’ve got a good idea: we’re going to put our lending officers in charge of risk management,’ that bank would be put out of its misery immediately,” said Isaac. “That’s what the government just did. It put the regulators in charge of assessing their own performance. It’s a very bad system.”

The new law also sets up different rules for big banks — those with more than $10 billion in assets — and the rest of the industry. That means a handful of banks will continue to enjoy “too big to fail” status – complete with an implicit government guarantee that lowers their borrowing costs and gives then a competitive edge, according to Hurley..."

"...It’s also not clear how the industry will respond to tougher new consumer protections once they are written. Efforts to restrict one set of bank fees, for example, could simply shift those consumer costs to another form of revenues for banks. If fee restrictions make some customers unprofitable, they may see their accounts canceled, according to Richard Bove, a bank industry anlayst at Rochdale Securiteis.

“My guess is there will be at least 10 million people who lose their bank accounts in the United States over the next 12  months, and they will not get banking services,” he said. “Which means that they will have to use payday loans, they'll have to use Western Union payment services, they'll have to use a series of other methods of handling their banking because they won't be profitable for banks and the banks won't keep them.”

Under the new law, banks that face higher capital requirements — designed to provide  a greater cushion against bad loans — will have less money to lend. That could make it more difficult for businesses to borrow while the economy is struggling to get back on its feet.

Tighter lending regulations will also make it harder to get a mortgage, according to Howard Glaser,  a mortgage industry consultant who served the Department of Housing and Urban Development in the Clinton administration.

“Consumers will see ‘safer’ mortgages, but fewer of them will qualify,” he said. “They will have fewer choices of mortgage lenders as the concentration of mortgage lending by a few big banks accelerates.”