Lawmakers guide Dodd-Frank bill for Wall Street reform into homestretch By David Cho, Jia Lynn Yang and Brady Dennis Washington Post Staff Writer Saturday, June 26, 2010; A01
Nearly two years after tremors on Wall Street set off a historic economic downturn, congressional leaders greenlighted a bill early Friday that would leave the financial industry largely intact but facing a more powerful network of regulators who could impose limits on risky activities.
The final bill took shape after a 20-hour marathon negotiation between House and Senate leaders seeking to reconcile their separate versions. The legislation puts a lot of faith in the watchful eye of regulators to prevent another financial crisis. New agencies would police consumer lending, the invention of financial products and the trading of exotic securities known as derivatives. Bank supervisors would have the power to seize large, troubled financial firms whose collapse could threaten the entire system. The bill calls for banks to hold more money in reserve to weather economic storms but leaves the details to regulators.
But with a few exceptions, the measure avoids dictating to Wall Street what it can and cannot do. The bill does not break up big banks or ban the trading of derivatives. Nor does it significantly streamline the confusing array of financial regulators in Washington.
The House and Senate are set to vote on the legislation next week, and administration officials said President Obama could sign it into law before July 4.
The action capped a surprisingly good week for Wall Street. On Thursday, Democrats failed to pass a separate bill that would have raised taxes on some of the country's wealthiest financiers. On Friday, stocks of financial firms jumped when trading opened in New York. Many analysts said the markets breathed a collective sigh of relief that the regulatory reform talks were over and that the results could have been much worse for the financial industry.
One firm that is likely to face more oversight is Goldman Sachs, which has become emblematic of the excesses of Wall Street. Regulators would more carefully track the firm's riskiest activities. In the coming year, a regulatory council could force the bank to shed its sizable hedge funds and private-equity activities. It also could be banned from making financial trades for its own profit instead of for clients, shaving roughly 10 percent from the firm's revenue. But after those changes, Goldman Sachs and a few other financial titans will still dominate the financial system, the analysts said.
A flurry of dealmaking allowed several industries to escape the new system. At the last minute, auto dealers were granted exemptions from new consumer rules, despite their major role in lending. Most mutual fund and insurance companies avoided a ban on some risky trading. Community banks, which make up the vast majority of their industry, got a carve-out months ago.
Still, the deal reached a few minutes before dawn Friday all but ensures that Obama will see his second major legislative achievement of the year, after health care, Democrats said. It also gives the president momentum as he presses major economies in Europe and Asia to make similar changes at an economic summit in Toronto this weekend..................>>>>......................>>>>...........http://www.washingtonpost.com/wp-dyn/content/article/2010/06/25/AR2010062500675_pf.html
The two dimwits who brought us Freddie and Fannie just wrote a bill to control the financial system, never included Freddie or Fannie, and it took 2,000 pages to do and when finished Dodd said we'll have to wait and see if the bill will control future problems. I'm just not full of confidence that these two can do anything right.
U.S. President Barack Obama gestures prior to a 2010 G8 Summit photo with the ''My Summit 2010 Youth'' at the Deerhurst Resort at Muskoka in Huntsville, Canada, June 25, 2010.
Credit: Reuters/Saul Loeb/Pool
TORONTO (Reuters) - President Barack Obama, fresh from a win on a sweeping overhaul of Wall Street regulations, on Saturday urged Congress to take up his proposal for a $90 billion, 10-year tax on banks as the next step in reform.
Obama wants to slap a 0.15 percent tax on the liabilities of the biggest U.S. financial institutions to recoup the costs to taxpayers of the financial bailout.
"We need to impose a fee on the banks that were the biggest beneficiaries of taxpayer assistance at the height of our financial crisis -- so we can recover every dime of taxpayer money," Obama said in his weekly radio and Internet address.
Obama, who is in Canada to attend gatherings with leaders of the world's biggest economies, also used the address to welcome a deal by congressional negotiators on a historic rewriting of U.S. financial regulations.
Obama hopes to tout the changes as a model for other countries at the Group of 20 summit on Saturday and Sunday.
"I hope we can build on the progress we made at last year's G20 summits by coordinating our global financial reform efforts to make sure a crisis like the one from which we are still recovering never happens again," he said.
The financial regulation package would set up a new financial consumer watchdog, create a protocol for dismantling troubled financial firms and mandate higher bank capital standards, with the aim of avoiding a repeat of the 2007-2009 financial meltdown.
The bill, marking the biggest changes to the financial regulatory structure since the 1930s, still needs final approval from both chambers of Congress.
Obama, who hopes to sign the legislation by July 4, urged Congress to push the bill "over the finish line."
With congressional elections looming in November, Obama hopes the financial reform and the bank tax idea will resonate with U.S. voters furious over Wall Street risk-taking that led to the financial meltdown and the worst recession in decades.
Some lawmakers have indicated they are receptive to the bank tax proposal but others have questioned whether it is fair to impose the tax on banks that have already repaid money from the Troubled Asset Relief Fund to make up for losses by American International Group Inc and General Motors.
Financial companies with more than $50 billion in assets and hedge funds with more than $10 billion in assets will be hit with the new levy upon enactment and lasting until 2020.
(Writing by Caren Bohan, Editing by Mario Di Simine) Just who does Obama think is going to pay this tax the bank or maybe the bank will just pass the cost of the tax onto it's customers.
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