The Reform will certainly bring changes to our state of Economy.
Are they answers to our current demise?
Numerous experts do not think so. I have purposely selected an Analysis from a web site that mostly supports the left. The comments made sense.
From the highlights of the analysis, can you see the flaws and pitfalls?
Why does our administration and the democratic leadership plunge into such change despite warnings by experts and dissensions by the GOP and constituents?
Does it appear that they do what they want to do once again, and the rest of us do not count?
ANALYSIS (excerpted and highlighted by me. See link for entire article)
by John W. Schoen Senior Producer
msnbc.com updated 7/15/2010 6:03:33 PM ET
Billed as the most sweeping financial reform since the 1930s, the massive 2,300-page bill is intended to prevent a repeat of the 2008 financial crisis.
Critics are warning that key provisions of the measure may fall short of what they were supposed to accomplish.
“I would say that nothing in this bill would have prevented the previous crisis ,” said William Isaac, former chairman of the Federal Deposit Insurance Corp. “And it clearly won’t prevent the next crisis.”
The law sets broad guidelines for the existing patchwork of regulators — including the Federal Reserve, Securities and Exchange Commission and Commodity Futures Trading Commission — and establishes bodies to oversee consumer protection and monitor “systemic risk.”
Those regulators have been tasked with writing the specific rules of the road governing limits on risk-taking by financial firms and previously unregulated trading. A new consumer protection bureau is supposed to guard against lending abuses.
It will take years before the impact of the law is known because most of the specific regulations have yet to be written.
“ There are a lot of unanswered question that were thrown to regulators,” said Jay Brown, a professor of corporate and securities law at the University of Denver. “…because there are no answers.
By leaving so much to the discretion of existing regulators, the new law is “a boon to Wall Street lobbyists, who will now be working behind the scenes to influence the regulators,” according to John Taylor, president & CEO of the National Community Reinvestment Coalition.
“This is what happens when you allow the very industry that caused the problem to buy all the front-row seats at the bargaining table,” he said.
Other critics of the measure argue that regulators — not regulations — were the major cause of the financial meltdown.
The wave of predatory lending that sank the housing market, for example, could have been largely prevented if the Federal Reserve had enforced existing rules on mortgage lending, according to Cornelius Hurley, director of the Morin Center for Banking and Financial Law at Boston University.
Under the new law, banks and other financial institutions will be overseen by a council of regulators. But there’s little to be gained by entrusting that task to the same regulators who failed to spot the causes of the panic the first time, said Isaac. While the law creates a separate agency with a single consumer mandate, it remains beholden to those regulators, who retain the power to veto its regulations and enforcement actions. That setup, said Taylor, could seriously hamper the board’s effectiveness.
“That club of regulators is very insular, and usually in agreement,” he said. “They can kill serious reform, and the financial lobby remains much more influential with regulators than consumer advocates.”
According to Richard Bove, a bank industry analyst at Rochdale Securities: “My guess is there will be at least 10 million people who lose their bank accounts in the United States over the next 12 months, and they will not get banking services,” he said. “Which means that they will have to use payday loans, …Western Union payment services, … and a series of other methods of handling their banking because they won’t be profitable for banks and the banks won’t keep them.”
Under the new law, banks that face higher capital requirements — designed to provide a greater cushion against bad loans — will have less money to lend. That could make it more difficult for businesses to borrow while the economy is struggling to get back on its feet.
Tighter lending regulations will also make it harder to get a mortgage, according to Howard Glaser, a mortgage industry consultant who served the Department of Housing and Urban Development in the Clinton administration.
“Consumers will see ‘safer’ mortgages, but fewer of them will qualify,” he said. “They will have fewer choices of mortgage lenders as the concentration of mortgage lending by a few big banks accelerates.”