| Financial Reform: Sooner, Later . . or Ever? |
 |
 |
 |
| Monday, 15 March 2010 19:01 | ||
|
Last September we wrote a blog post about the importance of financial reform. It was entitled,Stop Gambling with our Money. Obviously, any meaningful reform would have to result in enough of an overhaul to clean up the debris left from the recent financial meltdown, but more to the point, it would have to set up all the safeguards necessary to prevent any future financial disasters. We suggested that because the issue was such a politically charged hot potato, Congress needed to get the ball rolling before the 2010 mid-term elections. We didn't expect anything to really happen until at least 2011, but now we are beginning to see the first faint glimmers of things in motion. Senate banking committee chairman, Chris Dodd, is set to release a bill today, Monday 15th, that could potentially change the regulatory landscape and possibly create a consumer division at the Federal Reserve. The consumer division would have its own budget and a presidential-appointed director. It would have the power to write rules including the authority to crack down on banks with more than $10 billion in assets. But those rules could be overturned by a two-thirds vote from another group called the risk council. The job of the risk council would be to keep an eye out for potential red flags within the financial system and stop them before they could do any damage. It all sounds promising, if a bit sketchy, but some kind of reform is needed to restore consumer confidence in our financial system. Of course, as they say, the devil is in the details, and there are still plenty of those to work out, not to mention all the usual partisan bickering to sort through. Here in a nutshell, are brief highlights in the initial version of the bill:
It's too early to know how all of this will shake out, what proposals will be cut, which will be watered down, how many amendments will be added, what, if anything, will even survive, etc. In fact, by the time you read this, changes will already have been made. But you can expect a continual locust swarm of highly-paid banking industry lobbyists to fight reform on all fronts. There will be plenty of money passing hands and deals cut that we'll never hear about. But that's how it goes because some things will never change, and yet it's clear that some change is needed. Regardless of how much consumer protection, if any, is eventually built into the system, in the end you are still on your own. Wherever you choose to put your money, regardless of how sophisticated you may believe you are, or how professional your financial advisor is, nothing is guaranteed. You are never investing. You are only speculating. If you're in doubt about that, please pick up a copy of our book,The Big Gamble: Are You Investing or Speculating?. Equipped with the sensible information, case studies, and insights that the book offers, you'll be better prepared to proceed with caution. |
||
Valuable Resources
