Financial Reform Is Being Gutted … And Congress Might Not Even Realize It

Published on Global Research.ca, by Washington’s Blog, December 12, 2009.

… One amendment would allow federal regulators to preempt state financial laws and the other essentially would scrap the creation of a Consumer Financial Protection Agency.

“We still have some details to hammer out,” said Michael E. McMahon, D-N.Y., a New Democrat who has played a prominent role in the caucus negotiations over the final regulatory overhaul bill.

The amendment that would give the federal government the ability preempt state laws on financial protection issues is being offered by Melissa Bean of Illinois, a New Democrat. Supporters argue that, without it, financial companies would face a patchwork of state and federal regulations. 

The other amendment, to replace the proposed consumer agency with a council of regulators that would oversee consumer protections for financial products, was offered by Idaho Democrat Walt Minnick, a Blue Dog.

The financial industry staunchly opposes creation of the agency, saying it will squelch innovation. The Chamber of Commerce is “whipping the vote hard” on the Minnick amendment, a House aide said.

Investment analyst and financial writer Yves Smith exhorts her readers to call Congress today to fight back against the lobbyists:

OK, sports fans, I know politics sucks, but it takes VERY LITTLE time to call or e-mail your representative to give him or her a piece of your mind. If you are not trying to be part of the solution, you are part of the problem. And if you can take a few minutes to call, be sure to call an in-state office, not the DC office. One big issue is a late addition to the House financial reform bill which would further crimp state’s rights (and recall it was the states, that led the charge on dot-com abuses, auction rate securities, and now on alleged rating agency fraud. This is an effort to gut the last channel willing to take on the banksters). Even Reuters is putting the state of play in unusually stark terms:

An army of lobbyists from banks and Wall Street have worked for months to block, water down and delay the bill, which would threaten the profits of many financial services firms.

A summary of all proposed amendments to the financial reform bill has been put together by the Committee on Rules.

The 242-page manager’s amendment – a kitchen-sink amendment that pulls in all the last minute deals (so you can actually see handwriting on the PDF) is where you can see a lot of important policy changes. (full text).

(Global Research Articles by Washington’s Blog).

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