The Republican Financial Reform Bill
The Democrats want to charge a fee to banks amounting to 50 billion dollars to cover the costs of the recent bail out. any future foreclosures. (Thanks, Nolan!) I also thought I heard someplace that Obama wanted some sort of fee to cover the remaining costs of the bail out but apparently, that isn't part of this package. I am not sure since Geithner claimed the banks had paid back the bail out money. If true, it would relieve the tax payers of the burden. However, the Republicans are concerned that the money might be used for another bail out. My guess is that the language of the bill does not place tight enough restrictions on the use of the money. The Republicans prefer that the shareholders and the management of the firm that's in financial difficulties pay the cost of any bankruptcy proceedings. Both plans are viable.
The Democrats want the creation of a bankruptcy court. The basic idea is that if the failing of a financial institution threatens the state of the economy, then the government has the right to step in and liquidate the firm's assets theoretically preventing the failure of the bank from causing major setbacks in the economy. I think the Republican objection is that it is more big government. I think it is absolutely necessary.
The Democratic version of the bill creates agencies to monitor the financial transactions in order to determine when a financial institution is taking too many risks. Or at least, that is my interpretation of it.
The Republicans are not only leery about creating more government agencies, they don't agree with the actions of the Treasury department and the Federal Reserve Board in the past year. They do not want to expand the powers of any existing agency.
Overseeing the financial transactions of a bank is more big government according to the Republicans. My concern is that the Republican version of financial reform may have no safeguards against national economic problems like the current recession due to the risky transactions of the financial institutions.
The Democrats want the creation of a new federal agency called the Consumer Financial Credit Service. The example brought forth on PBS was a soldier who arranged to lease a car while she was serving in another country because she knew she would be coming home soon. But when she got home, she discovered that the car did not have all the features promised her. While I agree that no US business should short change a soldier coming home from serving our nation, I question the need for a new government agency. Instead I would want transparency. Another words, soldiers who are unsatisfied with some transaction like the one described should have easy access to documents explaining exactly how to go about achieving satisfaction if the dealership will not comply with the terms of the sales or lease contract.
Published by John Mario
As a child, I wrote short stories and read them to my friends. I studied interior house wiring in a vocational high school. I majored in electrical engineering in college. I worked for 8 years as an electon... View profile
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2 Comments
Post a CommentNo. Read it again. The Dodd bill (Democratic bill) raises $50 billion from the banks for a fund that will cover FUTURE dismantling of failed banks. No bailouts are involved.
Very good summary!