Another legislative achievement for Obama...

Einhard

http://www.bbc.co.uk/news/business-10654128

Sweeping US financial reform passed by Senate

The US Senate has given final approval to the biggest overhaul of American financial regulation in decades.

The reforms are intended to avert a repeat of the 2008 crisis that brought the world economy to the brink of collapse.

The Senate vote is a major victory for President Barack Obama and comes after months of political wrangling.

Speaking afterwards, Mr Obama said the new regulation would give the strongest consumer protection in history.

He said the American people would never again be asked to foot the bill for Wall Street's mistakes.

Senators approved the reform bill by 60 votes to 39. It was passed by the US House of Representatives earlier this month.

The reforms are designed to reduce the risks that banks take and to boost protection for consumers. They include new government powers to break up any company that becomes so big its failure could threaten the economy.

Mr Obama said it would bring an end to "shadowy deals".
"Even before the financial crisis that led to this recession, I spoke on Wall Street about the need for common sense reforms to protect consumers and our economy as a whole," he said.

"But the crisis came, and only underscored the need for the kind of reform that the Senate passed today. The kind of reform that will protect consumers when they take out a mortgage or sign up for a credit card, reform that will prevent the kind of shadowy deals that led to this crisis, reform that would never again put taxpayers on the hook for Wall Street's mistakes."

Moments after the vote, Federal Reserve chairman Ben Bernanke said: "The financial reform legislation approved by the Congress today represents a welcome and far-reaching step toward preventing a replay of the recent financial crisis."

Consumer protection

The legislation has been described by US Treasury Secretary Tim Geithner as "the most sweeping set of financial reforms since those that followed the Great Depression".

The legislation creates a new federal agency designed to oversee consumer lending and outlines new regulations for complex financial instruments.

To this end, it will set up a powerful consumer financial protection bureau, with powers to clamp down on abusive practices by credit card companies and mortgage lenders.

Large banks will also be required to increase the amount of capital they hold in reserve against loans going bad.

However, they will only be forced to do so after five years, as the government is keen that banks do not hold back on lending money during the economic recovery.

The bill also introduces the so-called Volcker rule - named after the former Federal Reserve chairman Paul Volcker, who proposed it.

Banks will be banned from what is called proprietary trading - effectively taking bets on financial markets using its own money.

They will also be limited to investing a maximum of 3% of their capital in speculative businesses such as hedge funds or private equity funds

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So, in less than 18 months since coming to office, Obama has successfully steered three landmark pieces of legislation through Congress, and achieved two of his campaign pledges. The largest stimulus package in American history was pushed through in April of last year, followed this year by Health Reform, the greatest piece of social legislation since the 60s, and now we have the most radical and far reaching financial reforms since the Great Depression. This leads me to conclude that Obama has had the greatest impact in his first 18 months than any recent president and, in terms of achieving key policy goals, the most successful post-inauguration period since Regan at least. Would anyone disagree with this? And note, whether one disagrees with his policies is irrelevent to the question, so no partisan mudslinging please...

Carcharodon

Yea, he has done well in regards to what you have said but I guarantee it is no where near as much as he and millions others would of liked. I don't blame him for this but this but this legislation is pretty water downed.

Einhard

Carcharodon wrote: »

Yea, he has done well in regards to what you have said but I guarantee it is no where near as much as he and millions others would of liked. I don't blame him for this but this but this legislation is pretty water downed.

Oh yeah, I agree with your there, but a little compromise to ensure the passage of landmark legislation is better than no compromise and no legislation. Just ask Bill and Hilary! And even having been watered down, the three bills are still almost unprecedented in recent American history in their scope and/or impact.

Denerick

He hasn't exactly dredged the oceans and realised the paradise on earth he promised in the election campaign, but he's done OK considering the insane opposition.

Nodin

He's a great career ahead in cat herding when he leaves office.

Amerika

Tell me, how is the "proxy access" provision related to the financial crisis?
http://www.washingtontimes.com/news/2010/jul/14/finance-bill-favors-interests-of-unions-activists/

Overheal

dunno. Maybe it was a vote-buy. Does seem kinda odd.

on the other hand I could see why having a labor union rep on the board of directors would be a good thing. You know, when the execs decide to do something that will more or less screw over their employees.

Don't look at me; I've never been in a union and don't think too much or too little of them.

Einhard

Amerika wrote: »

Tell me, how is the "proxy access" provision related to the financial crisis?
http://www.washingtontimes.com/news/2010/jul/14/finance-bill-favors-interests-of-unions-activists/

Not that I want to get into an arguement about the intracacies of the bill, but the proxy access seems to ease the process whereby groups, as opposed to individuals, with large numbers of shares gain a directorship. It's not limited to unions and liberal groups at all. I'm not sure I see the problem with shareholders gain board representation.

Amerika

So which fundamentals does this bills form of proxy access provision process support (which makes it easier for unions, environmental groups and other activist organizations to put their representatives on the boards of directors of corporations they hold some shares in)… Capitalism, Marxism or Socialism?

kev9100

Although the bill is good, its success will depend on how it is enforced and who heads the Consumer Protection Agency. Hopefully, its someone who genuinely cares about consumers.

Overheal

Amerika wrote: »

So which fundamentals does this bills form of proxy access provision process support (which makes it easier for unions, environmental groups and other activist organizations to put their representatives on the boards of directors of corporations they hold some shares in)… Capitalism, Marxism or Socialism?

Capitalism, by process of elimination. And assuming its such a narrowed multiple choice question.

Amerika

Overheal wrote: »

Capitalism, by process of elimination. And assuming its such a narrowed multiple choice question.

This you've got to explain :pac:

Einhard

Amerika wrote: »

So which fundamentals does this bills form of proxy access provision process support...Capitalism, Marxism or Socialism?

Democracy.

You'd see that if you took off the partisan goggles for just a moment. The proxy access provisions aren't limited to unions and left wing groups, but to organisations of every political, religious and ideological persuasion.

Are you really trying to contend that there is something unAmerican about granting board representation to groups which hold large amounts of shares? Wow, home of democracy indeed...

Overheal

Amerika wrote: »

This you've got to explain :pac:

Conversely, explain how it's Marxist and/or Socialist. Nobody is handing anybody ownership of anything - Marxism and Socialism from my understanding seems to be about handouts. Nobody is handing shareholders their shares: they bought those shares with good ol' capital.

Proxy access makes it easier for shareowners to nominate their own canidates for corporate board directors by letting them place their nominees for director on the company’s proxy card. Access to the proxy is widely available to shareowners in many European countries. But in the United States, public companies are not required to provide shareowners with access to the proxy to nominate directors. The only way that shareowners can present alternative director candidates at a U.S. public company is by waging a full-blown election contest. For most investors, that is onerous and prohibitively expensive.

Why proxy access matters The Council believes that a measured right of access is imperative. Directors are the cornerstone of U.S. corporate governance. Their job is to monitor management in the best interest of the company’s shareowners, whom they represent. Since the primary role of shareowners is to elect and remove directors, it makes sense that investors get a fair crack at running their own candidates without having to leap formidable financial and procedural hurdles. Weak director elections can breed complacent boards that take a minimalist approach to their oversight duties. If directors knew there was a good chance that they could lose their board seats in a contest, they might be more inclined to monitor and rein in a CEO who is pursuing an excessively risky strategy, and make sure that executive incentive pay is strongly tied to corporate performance.

Permitting shareowners to nominate candidates for director on the company's proxy card would invigorate board elections and would make boards more responsive to shareowners, more thoughtful about whom they nominate to serve as directors and more vigilant in their oversight of companies.

http://www.cii.org/resourcesKeyGovernanceIssuesProxyAccess