AP- Harry Reid and Nancy Pelosi
The U.S House of representatives voted Friday to approve a bill that will bring broad reform to financial markets. The bill passed 232-202 with no Republicans voting for the measure.
President Obama was quick to praise the bills passage. “Americans don't choose to be victimized by mysterious fees, changing terms and pages and pages of fine print. And while innovation should be encouraged, risky schemes that threaten our entire economy should not," he said. "We can't afford to let the same phony arguments and bad habits of Washington kill financial reform and leave American consumers and our economy vulnerable to another meltdown."
The 1200 page regulatory monstrosity was fiercely opposed by the banking industry and many Republicans who believe the bill will stifle industry innovation and result in even greater government intrusion into private enterprise.
"Their bill will continue the destruction of jobs in this country," said New Jersey Republican Scott Garrett. Jeb Hensarling of Texas added that the bill will force “sweeping draconian powers" on the financial sector.
Regulations that will be imposed on Wall Street and the banking industry include:
• Creation of a “council of regulators” to promote stability in the financial sector and identify firms that are so large their collapse would threaten the entire financial industry. These types of firms will be more scrutinized, regulated and subject to greater oversight.
• Allows the government to dissolve or dismantle large financial firms that fail or that it believes will fail. Leaves open the possibility of additional “bail outs” if the government believes it is appropriate, and circumvents traditional bankruptcy restructuring.
• Creates another new bureaucracy to protect consumers from predatory lending practices.
• Controls executive compensation allowing regulators to reject what they deem as “inappropriate” or “risky” compensation practices.
• Allows for auditing the Federal Reserve which effectively ends its autonomy from government influence.
The legislation now enters the Senate where it appears to face a much more difficult path to passage.
This bill continues the relentless attack by the Obama administration on private enterprise, while creating an ever larger government fraught with bloated, costly and inefficient regulations and new bureaucracies.
As a result, look for a less responsive financial industry, higher fees, erosion of service and loss of talent to other industries where the government has not yet intruded.