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A couple of the key points in the reform are to:
"The legislation would establish a consumer financial protection regulatory agency that could write new rules to protect consumers from unfair or abusive mortgages and credit cards.
"It would create a council of regulators that would sound an alarm before companies are in position to trigger a financial crisis. The bill would also establish new procedures for shutting down giant financial firms that are collapsing."
These are two areas that could help us avoid such a collapse in the future and more people would be informed about what they are getting into. Do you like these aspects of the reform and what else would you add to it?
http://money.cnn.com/2010/05/19/news/economy/Wall_Street_reform/index.htm
I do like the aspects of the reform, but I am not surprised it was shut down. We as a nation are hesitant to regulate free markets, but a change does need to be made.
ReplyDeleteThe proposed reform has many good points but its very watered down and I'm not sure it would be effective. I recall the simple test on reform that Stiglitz described in Freefall: "If the proposed reform was in place before would the current financial crisis have occured?" While I think the current reform would give the government the option of having more power, I don't necessarily believe it would have stopped the financial crisis.
ReplyDeleteThe proposed Consumer Financial Protection Agency is something I am not a fan of. I think it goes a bit too far. Putting control of nearly every form of available credit in the hands of the government could be dicey. Setting too strict of rules on borrowing could hurt potential responsible borrowers. Regulating credit cards with a low limit seems a bit extreme to me. Forcing lenders to be more honorable and not deceive their customers is a good idea though. I just hope it is not too overarching. A lot of the other reforms seems ok to me.
ReplyDeleteI agree with multiple points in this bill. I think that bills that protect consumers from unfair or abusive mortgages and credit cards is a great step in the right direction. American's often pay 20+ percent on their credit cards and I feel that this aspect of the bill will protect many citizens who do not understand the intricate rules of financial instruments.
ReplyDeleteEven though consumers should be aware of the situations they're getting themselves into with taking out mortgages, the recession has shown that it is necessary to protect people even if they do their research. To me, it seems like more of the reason why this reform didn't pass would be the "alarm before companies are in position to trigger a financial crisis". Companies made money by putting the economy into such situations and they don't want there to be a limit to the ways in which they can make more money. Maybe if this reform was broken into parts we might be able to get some things passed....something would be better than nothing.
ReplyDelete