America’s love for its financial elites is at an all-time low. Everywhere you look, ordinary folks are in revolt against abusive debt collectors, becoming savvy about debt refinancing, and “moving their money” – not only to cards with lower interest rates, but to different (and smaller) banks. But there’s arguably no greater sign of a change in the air than the amazing speed with which Wall Street reform has taken shape over the last few weeks. At UWSA, we want to make sure you understand what “Wall Street reform” means for you on Main Street, so here’s an overview of the situation.
On May 21, the Senate passed what many are calling the most significant financial legislation since the New Deal. Passing 59-39, the Senate bill, which required only 51 votes, adds a new layer of oversight for major Wall Street institutions and aims to prevent big bank collapse and the taxpayer bailouts that follow from ever happening again. New rules will be in place for dealing with failing firms and pinpointing the value of “derivatives”, the complex – and some say shady – financial products at the heart of problems that imploded once-mighty players like AIG and Lehman Brothers.
But perhaps the most important change “on the ground” for ordinary citizens is the birth of a new consumer protection agency “inspired” by a vocal Wall Street critic. Naturally, the details behind the new agency are still fluid as reconciliation goes on between House and Senate versions of the legislation. What is clear, however, is that abusive lending practices are in the Obama Administration’s sights: and that means both mortgage lenders and growing rates of credit card debt are likely to be impacted. The Christian Science Monitor has more details on one way debit and credit changes might take shape.
Consumer protection advocates are cautiously optimistic that Wall Street reform might be a big win for ordinary consumers; especially as a follow-up to earlier attempts at consumer credit reform that were largely rendered toothless by creditor maneuvering before key provisions went into effect. But the battle is not over; financial reform carries with it a fair amount of political theater and lobbyist strategizing.
Reform supporters like Rep. Barney Frank (D-MA) are pulling for a final version of the legislation to reach President Obama’s desk by July 4th – but whether it will mark a financial “Independence Day” for taxpayers remains to be seen. UWSA will keep you updated on the latest news in the reform effort, and its impact on you, as events develop.