The House of Representatives has approved a Democratic plan that would significantly tighten federal regulation of Wall Street and the financial sector. This advances a far-reaching Congressional response to the financial crisis that almost destroyed our nation’s economy. The House voted 223 to 202 to approve the measure. The bill creates a new agency to oversee consumer lending, establishes new rules for transactions that contributed to the meltdown, and seeks to reduce the threat that one or two huge companies on the verge of collapse could bring down the economy. The Senate has made less headway in drafting a companion bill.
Most observers believe this vote to be the most significant legislative act to confront the financial crisis that exploded last year since the vast and costly bailout that was pushed through Congress at the peak of the emergency. It was an effort to address comprehensively the underlying causes of the collapse, which was reckless risk-taking unrestrained by regulation. The lack of regulation made it very easy for smart folks to do dumb things with little if any fear of having to pay for their actions. The bill’s principal provisions establish a process that will:
Despite the House action, final passage won’t come soon. The Senate is still developing its own measure for debate early next year and any Senate bill is likely to have substantial differences from the House measure, necessitating further negotiations.
The overhaul of Wall Street regulation is a top domestic priority of the Obama administration, which supported the House bill. Most Democrats agreed that heightened regulation of the financial services industry was warranted by the events leading up to the financial crisis. A lack of adequate regulation during the Bush Administration was a central reason for the economic collapse in the first place. Republicans have largely ignored the need to more strongly police Wall Street in the aftermath of the events of recent years. It’s time for them to join with Democrats in Congress and help bring about the needed changes.
Source: New York Times
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