الجمعة، 25 يونيو 2010

[caption id="" align="alignleft" width="250" caption="Wall Street"]Wall Street
Creative Commons License photo credit: Sparkly Kate[/caption]

The angel of compromise did yeoman’s work to fashion a financial reform bill. All this came about because of the recent crash of the banking system, which required much assistance from Washington DC.

It is the old tug of war between those who want regulation, and those who want to leave the market to its own policing.

The Republicans favor the Wall Street folks to their own policing, while the Democrats prefer more formal regulation from Washington. The problem is that both sides know that there is a need for regulation, but disagree on how entangled the government should be in policing and enforcing laws designed to combat financial wrong doings.

The compromise financial reform bill's most pertinentissues include: erecting a consumer protection agency, providing an early warning system to alert the public that danger is imminent for institutions deemed too big to fail, lowering credit card charges, and directing the secretive derivatives trading through exchanges and clearing houses.

The area of finance getting the most attention for reform is the much maligned and secretive derivatives market. These derivatives were the root cause of our financial woes, and because it is a $600 trillion industry, and the fact that many of the wonks could not explain to the average senator what the derivatives actually were, it made the reform in this area academic.

Because the financial institutions make a killing from these derivatives, their lobbyists will do anything to water down the legislation – the lobbyists’ efforts may fail because the public and the politicians from either side of the aisle are clamoring for reform in this particular area of finance. The final bill was voted on in conference and passed by a 27 to 16 margin, and now its goes to the house and senate for final passing.

Via Christian Science Monitor.

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