Obama Signs Off On Financial Reform Bill

After months of debate and compromises that left some members of both parties less than thrilled, President Obama signed the financial reform bill into law this morning, which means that all problems with all banking is fixed forever… right?

Said Prez-O about the bill:

These protections will be enforced by a new consumer watchdog with just one job: looking out for people — not big banks, not lenders, not investment houses – looking out for people as they interact with the financial system… the American people will never again be asked to foot the bill for Wall Street’s mistakes. There will be no more taxpayer-funded bailouts. Period.

The bill, whose real title is the Dodd-Frank Wall Street Reform and Consumer Protection Act, has been labeled a necessity by the White House and its supporters, who pin the recent economic meltdown on lack of oversight of the banking industry.

Those opposed to the bill have said it’s another unnecessary incursion by the federal government into the public sector, which will only cause more problems than it solves.

Here’s what Republican Congressman John Boehner had to say about it:

[The bill] provides permanent bailouts for his Wall Street allies at the expense of community banks and small businesses around the country, while doing nothing to reform Fannie Mae and Freddie Mac, the government mortgage companies that triggered the financial meltdown by giving too many high-risk loans to people who couldn’t afford them.

For a more detailed description of what’s in the bill, click here.

Obama Signs Sweeping Financial Reform Into Law [CBS News]

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  1. Eat The Rich -They are fat and succulent says:

    Lobbyists on your mark…..Set……GO!!!!

    Time to start paying off the ones who make and enforce the rules…..in a few years you will own them just like the MMS!

    • Nighthawke says:

      Too late for lobbyists now, it’s up to the lawyers and courts to gut the thing.

      • ARP says:

        Actually, if Bush is the new standard, they’ll simply not enforce, or create rules that border on absurd, so they don’t actually have to follow it.

  2. ThePrettiestStar says:

    Pretty sure Fannie and Freddie weren’t the actual triggers. Sorry Congressman-try again.

    • OnePumpChump says:

      Would Fannie and Freddie have issued so many loans if they couldn’t sell them?

      • ARP says:

        Correct me if I’m wrong, Fannie and Freddie don’t issue any loans, they backed them. Since banks knew they were being backed and the Fed was loaning out money for almost nothing, they lent money to anyone with a pulse (and probably a few without), knowing that the government would take on the risk of default (Run-on sentence FTW). They both share blame for that.

        • nbs2 says:

          My understanding is that it was a vicious circle. FM/FM essentially told banks they would back any loan the banks made. That led to banks making some loans that pushed the envelope, but things were ok. This led to FM/FM being more lax in their standards, which led to riskier loans, which were still ok. This continued until the house of cards collapsed.

          At least, that’s how I understand it.

          • exconsumer says:

            That’s incorrect. The vast majority of subprime loans were initiated and backed within the private sector. In fact, F and F held such a small share of subprime loans was because they couldn’t; standards set by the federal gov did not allow them to hold such risky assets. Also, you see a similar real estate meltdown in the commercial sector, which fanny and freddie does not participate in. The idea that Fannie and Freddie triggered the housing crisis (or that they were even ‘part of the problem’) is a complete fabrication and always has been.

            • nova3930 says:

              Then explain why Fanny and Freddy went tits up? If they weren’t heavily involved with problem assets then they should have been fine….

              • mac-phisto says:

                there was a lot of talk of brokers “grooming” loans to make them conform, even though the info they used wasn’t at all correct.

                so, there is some blame to be laid on the FMCs – they should have been reviewing loans to make sure the proper documentation exists, but banks are also largely to blame – they house entire wings of underwriters that are supposed to make sure these loans conform.

              • exconsumer says:

                They went ‘tits up’ because they did nothing but back mortgages . . . and the housing market crashed. Anyone holding any mortgages of any kind took a huge hit because the value of all houses plummeted. The entire economy took a huge hit and is still taking it, if you can remember. Hell, the company I work for, a media monitoring company, only last year started giving raises again. Does that mean they made and held a bunch of bad loans?

              • exconsumer says:

                . . . And mac-phisto, yeah, I’m sure this grooming existed, but the vast majority, around 80% of the troubled assets, came squarely from the private sector. The idea that F and F failed to check can’t be right. They can and did check, and for the most part kept the garbage out . . . that’s why they weren’t holding many bad mortgages.

                • mac-phisto says:

                  yeah, their problems had more to do w/ the fed requiring “mark to market” accounting rules. they had to price their portfolio like they had taken losses that they hadn’t actually realized, which put them in a state of insolvency & required gov’t action.

                  • exconsumer says:

                    Mark to market doesn’t cause problems, it just exposes them. And it can’t cause an otherwise able-to-pay organization into insolvency. Insolvency means you can’t pay your debts as they fall due. A company may end up with negative net assets if they don’t include the projected values, rather than current values, of their assets, but as long as they can pay their debts it is up to investors and shareholders how much of a negative balance they are willing to tolerate.

                    Marking an immature asset’s value as if it has matured won’t help you get that price in the market under any conditions, so there is no way -not- marking to market can help you actually pay anyone. If you can only pay in some hypothetical condition in which all your assets are mature, then you’ve just overspent plain and simple.

                    • mac-phisto says:

                      yes it can. there are two types of insolvency – cash flow & balance sheet. mark to market put the FMCs (& other FIs) into a state of balance sheet insolvency. & the regulators had zero tolerance for that. assets were priced as if they were sold today (only 2 years ago, when everything was shot to shit) & the FMCs (as well as other FIs) were required to offset the write-down with reserves, equity or contra-assets. only most couldn’t afford to do that without compromising their reserve requirements. hence, the temporary liquidity guarantee program was born.

                      the FMCs never had a problem paying their bills. even at the height of the burst, serious delinquency rates (60+ days) were less than 1.5%! it’s just that if they had to sell off their assets at the time, they would’ve received pennies on the dollar as if the whole damn portfolio was non-performing!

      • ThePrettiestStar says:

        Fannie and Freddie were certainly part of the problem-but they were only part, and not the biggest factor in the whole thing. I agree that they need to be reformed, but the only reason he pointed them out was to take a jab at a government program.

        • nova3930 says:

          fanny and freddy were backing the vast majority of the mortgage market.

          To say they weren’t one of if not the biggest problem in the whole crony capitalist system that the idiots on Wall Street and Capitol Hill built is ridiculous….

          • Operation Cornflakes says:

            It was a global housing bubble that kicked off the crisis. If Fannie and Freddie were the main culprits, then how do you explain the runup in house prices worldwide?

            • Gaz says:

              Because increased availability of loans leads to more buyers in the market, which drives up the prices for homes. This loan leveraging spread across the financial industry leading to the same effect across the globe.

  3. smo0 says:

    If it’s decided now that no more bailouts are to come… why were these companies given bailouts in the first place?

    Was it just a test to see if a bailout would miraculously fix the current state of the economy?

    It was a bad idea in the first place, people knew this – yet they did it anyway… this is like pad-locking the refridgerator at night so you don’t sneak food.

    • raydee wandered off on a tangent and got lost says:

      And unfortunately we’ll never see “what might have happened” if the bailout hadn’t happened. People will be guessing out of their arses for the next several decades, I’m sure, and they will all have meticulous proofs, and they will all wildly contradict one another.

      It’s possible in some situations that bailouts might work. Obviously not in this case, but politicians are accustomed to throwing money at problems in the hopes that those problems will go away. But they’ll know better next time, right?

      ha ha.

      • smo0 says:

        This time wasn’t 100% guessing… people who saw this downfall coming for a long time knew it wouldn’t work… but, you know, they only went to college for this stuff and don’t work for the white house :(

    • exconsumer says:

      When you say that the bailouts didn’t work, what do you mean? Because if by, ‘didn’t work,’ you mean ‘staved off the complete collapse of the financial sector, which we got a taste of with AIG, Bear Stears, and Lehman Brothers’. . . . Then I agree with you.

    • mac-phisto says:

      this isn’t the first bailout & this won’t be the last one. you can count on that. saying there won’t be any more is just empty words.

  4. EverCynicalTHX says:

    Anyone know what’s specifically in the bill and has anyone read it….or will we have to wait and see what the governments pushing down our throats again like the healthcare bill?

    • ARP says:

      I belive the approved Fox News/Republican talking point is “cramming down our throats.” Please use this term in the future if you’re going to be heavily partisan.

      Financial Reform Bill:

      http://banking.senate.gov/public/_files/FinancialReformSummary231510FINAL.pdf

      http://ourfinancialsecurity.org/2010/06/what-the-financial-reform-bill-will-do/

      Here’s a National Review article since you probably don’t read any sources that don’t agree with your preconceived narrative of the bill

      http://article.nationalreview.com/437139/financial-reform-bill-wont-stop-the-next-crisis/mark-a-calabria

      Health Care- most people disapproved of it due to FUD campaigns, but when broken out (e.g. pre-existing conditions, recission, high risk pools, etc.), most people agreed with the proposal.

      Finally, just because you don’t agree with something it doesn’t mean it was somehow forced on you or that you lack appropriate representation. That’s how representative democracy works. Elections matter, you lost. Get over it. I don’t like either of these bills either. They should have been much stronger. You’ll have your chance this November, where your numbers look much better.

      • nova3930 says:

        This has to be the dumbest fucking post I’ve ever read on here, and that’s saying a lot.

        “Health Care- most people disapproved of it due to FUD campaigns, but when broken out (e.g. pre-existing conditions, recission, high risk pools, etc.), most people agreed with the proposal. “

        Large numbers of people agreeing with an idea does not turn a stupid idea in a good idea. Many of our complaints were based on the bad consequences of the things you listed.

        “Finally, just because you don’t agree with something it doesn’t mean it was somehow forced on you or that you lack appropriate representation. That’s how representative democracy works. Elections matter, you lost. Get over it.”

        Congratulations, you’ve just shown that you have no fucking clue how our CONSTITUTIONAL democracy is supposed to work. You see, elections do have consequences, but only within the limited bounds of power described in our Constitution. If you exceed those bounds of power and start trampling on individual rights, then guess what, no matter what huge percentage of the population wants something, you can’t do it.

        If I could somehow elect a majority of representation to Congress that supported segregation, that WOULD NOT make a law authorizing segregation right either morally or legally. The same goes for this god awful shitty takeover of the health care system.

        In a representative democracy the minority doesn’t typically get what they want, but in a constitutional representative democracy, the majority might not get what they want either.

        So no, won’t just “get over it” not until either people buy a clue and start respecting those boundaries or we start judiciously applying rope to those who don’t….

        • Polish Engineer says:

          While I agree with all of your points, I fail to see how the healthcare bill violates the Constitution. The 20 page proposal with stock photography and no numbers that the Republicans brought to the table was hardly worth considering, especially when it was introduced so late in the game. if the Republicans had decided to participate in the political discourse instead of taking their ball and going to the other side of the chamber, maybe their proposals could have been incorporated into the legislation. They gambled they would be able to kill it, they failed, and cut themselves out of the final product. Many of the AGs refused to even sue at the direction of their governors because they knew that no laws had been violated.

          • psm321 says:

            Except that a lot of their (shitty) proposals were incorporated anyways by overly optimistic Dems who thought they would win some Repubs over.

        • ARP says:

          My point on Health Care was that as a whole most people opposed HCR, but when you told them the major components of the legislation, a plurality approved of it. You’re obviously a god, who can see into the future on the success/failure of the legislation and can decide for all of us whether it is good or not. Therefore can you please tell me what lottery numbers to pick for Power Ball?

          So, are you saying financial reform is also unconstitutional? Or just HCR? Because most legal scholars say HCR will pass constitutional muster and that the suits are for election purposes, not to actually do anything about it.

        • ARP says:

          “This has to be the dumbest fucking post I’ve ever read on here, and that’s saying a lot.”

          “Congratulations, you’ve just shown that you have no fucking clue how our CONSTITUTIONAL democracy is supposed to work.”

          So, when a vast majority (if not all) of HCR is upheld as constitutional, will you admit that your response was dumber than mine (which through the transitive property means, your own post would be the dumbest post you’ve ever read) and that you have even less idea of how our system of government works.

          Is your objection to the law based on the 10th Amendment or ICC? Gonzales v. Raich seems to favor me, but since that was dealing with Marijuana, my guess is that there was some judicial activism on the part of the conservative judges. U.S. v. Lopez put limits on bounds of ICC, but given the amount of money spent on HCR compared to local crime issues, I doubt they’ll say HC doesn’t impact interstate commerce. Of course, since the current panel of judges are more political than ever, so its hard to state. I’d be interested in your constitutional review, since you’ve obviously performed your own detailed analysis of SCOTUS precedent.

      • RickN says:

        “just because you don’t agree with something it doesn’t mean it was somehow forced on you”

        Doesn’t it mean exactly that? I don’t want some bill/law/rule/whatever but I must abide by it in spite of my objections – it has been forced on me.

        • ARP says:

          You’re right, I could have been more clear. I meant that the bill isn’t being imposed on you by some authority that doesn’t have the power to do so. It’s their job to make laws. As long as they are Constitutional (which I believe FR to be), they can do it.

    • Polish Engineer says:

      I’m getting incredibly tired of the line the Government is “ramming things down the throat” of America. America chose their representatives through open fair elections. And guess what the winners campaigned on: healthcare and financial reform. I bet if you go back and look at the tape of campaign speeches you will see those topics brought up in everyone single one. They told us exactly what they intended to do, we elected them in so they could do it, they did it, and somehow that equates to ramming things down American throats. Are you so jaded that you didn’t expect them to do what they said they would?

      And if you are so against the bill, did you ever write your Congressman? Did you ever attend a townhall? My guess is you just posted angry comments on Fox News articles.

      On another note, complaining about a bill you admittedly have no knowledge of is just asinine. Your post can be paraphrased as “I have no idea what is in this bill but it must suck.”

      • operator207 says:

        Me thinks when you hear these lines, they are from someone who didn’t vote for the current reps, and voted against them (probably because they said they would do what they are now complaining about). Or your hearing from people that *did* vote for the current reps, and those reps are now doing things they said they would not do, or are doing the opposite of what they said they would do. (example: Rep says in beginning “I will vote to make abortion illegal”, but once in office, he signs a bunch of documents that make abortion even more legal and give doctors and patients many loopholes to use if they want to get one on the tax payers dime)

        It happens. A lot.

    • exconsumer says:

      Forced down our throats? That’s almost incoherent. A simple google search for ‘financial reform bill’ or ‘health care bill’ will bring up the text itself within the first few hits. Heck, the house and senate even publish different versions of the bill as they are working on it that you can read if you’d like. The idea that legislation is somehow unavailable to the public is crazy talk.

      • Traveshamockery says:

        Actually, the final bill was only posted for a few days before it was voted on. The various drafts mean nothing. The final bill is what’s important, and yes, it was rammed through at midnight on a weekend so it wouldn’t generate immediate fallout, without enough time for anyone to read the whole final draft.

        • exconsumer says:

          Incorrect:

          The final vote from the senate was on July 15th (Thursday) and passed the house on June 30th (Friday). There were about 20 days between the last amendment in the house and when the final vote took place, and the Senate voted on an unaltered version of the bill 15 days after that.

          45 days total.

          http://www.opencongress.org/bill/111-h4173/actions

          When you disagree with someone regarding something you are unfamiliar with, doing a little research before you form an opinion will go a long way. It changed my life.

          • exconsumer says:

            Excuse me, 35 days total.

            Still plenty of time for you to understand it well enough to know what it will do and how it works.

  5. parabola101 says:

    …”the legislation does nothing to diminish the economic and political power of these giants. It does not cap their size. It does not resurrect the Glass-Steagall Act that once separated commercial (normal) banking from investment (casino) banking. It does not even link the pay of their traders and top executives to long-term performance.” … Robert Reich

    • dolemite says:

      Hmm looks to be true. Probably why it passed so easily and the market didn’t crash today.

  6. BigHeadEd says:

    Much like the post 9/11 governmental initiatives, I expect that the main impact will be to create more and larger federal agencies, putting more people on the public dole. The impact to the financial institutions will be the creation of completely new tactics to circumvent the new rules, while little if anything is done to prevent unqualified borrowers from getting in over their heads with debt. Grand theater.

  7. NoRegrets78 says:

    None of this matters. Just provides more people for the banks to pay off to look the other way. Anyone who thinks the government does ANYTHING in the best interest of the people are sadly mistaken. The government is like any other big business, they are in it for themselves, and the money.

    • Polish Engineer says:

      Yes. Because schools, police, firefighters, the military, roads, federally subsidized student loans, the FAA, and FDA are there to earn the government money. Teachers never make sacrifices in order to make a positive impact on society. Hell, teachers make more than CEOs. And working nights while getting shot at in order to protect citizens, police work is obviously a cushy job. And roads… who the hell benefits from those things anyway?

      Think before you speak.

      • NoRegrets78 says:

        Generalization, obviously not literally nothing, but still. The military is there to protect us, but yet they seem to go after the wrong people. Why are we in Iraq again? Something about a group of Saudi Arabians attacking the US? Right. Who does that benefit?

        Police and Firefighters are paid with local taxes (at least in my area). Some more than others, and neither nearly enough. Feds don’t step in here.

        Fed Student loans carry interest don’t they?

        Roads…yea, right. Come drive in NY and explain to me where the money for roads is going.

        FAA/FDA – Effective because if they fail, people sue, and when people sue, the gov’t loses money.

        Teachers in my area are paid with local tax dollars. There is some fed aid, but not enough IMO.

        In the end it all comes down to one thing. The amount of money we pay in taxes is definitely going toward things that are not in the best interest of the people. They do just enough to keep the people complacent. My point remains the same though, we pay WAY more than we get back and I still firmly believe corruption rules in Washington.

        • Polish Engineer says:

          First, your post the said the government, no distinction to federal, state or local.

          As I understand federally subsidized student loans they are basically where the govt picks up a portion of the interest to make them affordable so banks will lend. The govt doesn’t actually issue the loan.

          When people got sick from bad chicken or have their plane crash, they didn’t sue the govt, they sued the producer. So the govt had no incentive to intervene other than the benefit of the people.

          National parks, money pits solely for the benefit of the people.

          The government, federal on down, does what it does for the benefit of the people. I wholeheartedly agree that they normally suck at it and do it terribly inefficiently, but 99% of civil servants aren’t in their jobs because they are raking in the dough.

          However, I concede that you get some guys like Dick Cheney who manipulate the system to start wars, grant contracts to friends, and drive national policy in a direction that benefits his former industry.

        • trashbaby says:

          some things I learned from my bank about the changes:

          This is a big one that has been discussed here: Retailers will be allowed to set a minimum amount for credit card transactions, provided it’s not more than $10. They’ll also be allowed to provide a discount when you pay with debit cards, checks or cash.

          You’re already entitled to receive a free copy of your credit report once a year by visiting annualcreditreport.com, but if you want to know your credit score, you must buy it from one of the credit rating agencies. That’s changing a little. Under the new law, you’ll be entitled to see your score for free if you’re turned down for credit, charged a higher rate than advertised, rejected for a job or turned away by a prospective landlord.

  8. Nighthawke says:

    Well, the White House sure didn’t make any friends with the moneymakers on the Street. They rebuffed any offers from Goldman Sachs, JP Morgan Chase, and others to join Obama for the signing ceremony.

  9. RevancheRM says:

    I’ve heard this several times in the last few weeks by (my fellow) Republicans about several issues up on the Hill. They make the statement that the act is actually designed to do the opposite of what it purports to be addressing. …and then the investigative reporters (such as at Politifact) demonstrate the speaker is not telling anything with any sense of credibility.

    My question: Is Boehner (funny name, phoentically) correct? Is there an obvious attempt to write the act as as a bailout? Or is he just speaking untriths with buzzwords again? A serious answer that is not off-the-cuff would be appreciated.

    • exconsumer says:

      Yeah, he seems to be just using words he thinks people will get upset over. I don’t see any provisions for any kind of bailout. In fact, this bill will allow the GAO ‘to audit the Fed’s emergency lending to financial institutions in the months surrounding the 2008 financial crisis. It also could audit low-cost loans the Fed provides to banks, and the purchase and sale of securities that the Fed undertakes to set monetary policy.’

      http://www.google.com/hostednews/ap/article/ALeqM5gFeHiLFDhDYT42EYM0b2BwyK9rrQD9GIBOS00

      I think he may be referring to the authority the Gov has -always- had in regards to bailing out an economic entity; and arguing that, since this bill does not take away that ability, then it constitutes ‘a permanent bailout’. I don’t know. The conservative denialism that’s been going on since Obama got elected is so contrary that it’s almost gibberish most of the time. He may be just talking to talk.

  10. AgostoBehemoth says:

    the bill does a lot – but very little of it is “reform” – it’s always best to take care of those that take care of you (big giant wall st. firms).. oh – and include a few new ‘taxes”, ur, “fees” as well.

    but once you name it “reform”, you can say you “supported reform” doesn’t matter if it really does much actual reforming. And – you can point to your opponent and say they’re against reform!!!

    @ the prettiest star: Fannie & Freddie had LOTS to due with the crisis, not the only cause – there were many over the 25yrs leading up to it.

    • exconsumer says:

      F and F were, most certainly, not responsible for the housing crisis for two reasons.

      1. They did not carry anywhere near the same amount of subprime loans that private institutions did. In fact, they couldn’t. Their Gov oversight would not allow them to take such risks. Almost every set of numbers I’ve ever seen attributes between 70-80% of the problem causing loans to institutions with no oversight whatsoever. The private sector got where they are all by themselves.

      2. There was an equally bad crash in the commercial real estate market, which fanny and freddie could not have possibly influenced (even if they did have the ability to influence the residential housing market in the manner most critics describe . . . which it does not).

    • exconsumer says:

      Also, where in the bill did you see a tax increase? Can you point to the passage?

      • Polish Engineer says:

        Large firms are on the hook to fund the liquidation of their failing counterparts.

  11. john says:

    Holy crap! Dodd and Frank sponsored the bill! We are really screwed.

  12. sufreak says:

    I just read the bill as summarized by the AP. A lot of hollering about it being bad…but can someone point out an actual example of how this will be bad? Not exaggerations ‘just putting more people on the payroll’, but an example of how the consumer will be harmed by this?

    • ktetch says:

      Don’t be silly. Facts and relevancies have no place in modern US politics. If the Lobbyists and political pundits say it’s bad, it must be bad!

    • Polish Engineer says:

      There are new taxes and fee imposed on large banks to cover the costs of some of the new regulations, which could be passed down to the consumers.

      As with any regulation, the flexibility of the banks will be diminished and could lead to even less lending than is currently happening, which is also bad for consumers.

      Those are reasons I can think of. Now I personally believe the benefits of stabilizing the banking industry for the future outweigh them, but that is certainly up for debate.

    • Mike says:

      I think it is not so much what is in the bill, it is more what ISN’T in the bill. The biggest thing that is missing is the Volcker Rule. (http://en.wikipedia.org/wiki/Volcker_Rule) The problem with this bill is that it really doesn’t do much to prevent banks from over hedging. Before Glass-Steagall (http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act) was repealed under Clinton, we didn’t let deposit banks hedge themselves 40 to 1 like we do now. Under Glass-Steagall banks were safe, if you wanted to do risky investments you had to go to an investment firm; and deposit banks couldn’t take your money and make a bunch of risky investments.

      Of course, this is a criticism from the left. Honestly, I can’t criticize this bill from the right without breaking down into mere talking points.

  13. Big Mama Pain says:

    The “new consumer watchdog” had better be the current consumer watchdog, Elizabeth Warren.

  14. vastrightwing says:

    I’m listening to NPR and some guy say the word “mistake” many times. This was not caused by mistakes, it was caused by Goldman Sachs and the alumni/government. You can not separate Goldman from the government, they are one in the same. Of course Goldman Sachs will always get exemptions to every law there is when they want it, so this reform is a dog and pony show for us. It means nothing, it will not stop the next Ponzi scheme from blowing up. LOL

  15. wcnghj says:

    $10 credit cards minimums are legal, lovely.

    People will have to go to ATMs that don’t belong to their bank, pay ATM fees, then pay their own bank a fee for not using a fee-free ATM.

  16. OtakuboyT says:

    Oh Congressman Boner, will you ever get anything right?