News / USA

Battle Emerges Over US Financial Reform

Michael Bowman

The top Republican in the U.S. Senate has announced strong opposition to a Democratic proposal to reform America's battered financial system. A partisan battle has erupted over how best to prevent financial meltdowns and the economic havoc they inflict.

The struggling U.S. economy still bears scars from 2008, when a cascading failure of banks, investment houses, mortgage giants and insurance firms obliterated much of America's financial landscape, froze credit for consumers and businesses, and accelerated a plunge into the deepest recession since World War II. In a desperate bid to prevent complete economic collapse, the federal government spent hundreds of billions of dollars to bail out scores of near bankrupt private financial institutions.

Republicans and Democrats agree that the dire turn of events must never be repeated. But how best to fix the financial system is shaping up as the latest partisan fight to consume Washington.

Tuesday, Senate Minority Leader Mitch McConnell dashed waning hopes of bipartisan support for a Democratic financial reform bill. Addressing the Senate, the Kentucky Republican said the proposed package gives too much authority to the federal government and fails to protect taxpayers from the costs of any future bailouts.

"We cannot allow endless taxpayer-funded bailouts for big Wall Street banks," said  Mitch McConnell. "That is why we must not pass the financial reform that is about to hit the [Senate] floor [for debate]. The fact is: this bill would not solve the problems that led to the financial crisis. It would make them worse."

Under the Democratic bill, the U.S. central bank, known as the Federal Reserve, would be empowered to craft and enforce consumer protection rules for large financial institutions. Banks would also be restricted in the types of investments they can make. It was private institutions' dealings with complex financial products tied to special home mortgages for high-risk borrowers that helped spark the meltdown of 2008.

The Obama administration says the United States cannot afford to drag its feet on financial reform. U.S. Treasury Secretary Timothy Geithner had this response to Senator McConnell:

"Look at the devastation caused by this financial crisis," said Timothy Geithner. "Look at the damage it did to tens of millions of Americans. I do not think there is a tenable position anyone could take that says we do not need to fix this system."

Geithner says the current system allowed banks and other institutions to take huge risks without bearing the cost of failure.

"And you had the spectacle of the United States of America come into the worst financial crisis since the Great Depression [of the 1930s] and had, basically, no tools to unwind, to put into bankruptcy large institutions," he said. "The taxpayer faced an untenable choice: either to let the system collapse or put hundreds of billions of dollars of taxpayer money at risk. And I think that fundamental recognition is going to drive us to a necessary, essential, very well-designed, sweeping set of reforms."

But while applauding safeguards against future financial meltdowns, some progressive voices say America's financial sector must pay for damages already inflicted. The head of America's largest union umbrella group, AFL-CIO President Richard Trumka, says banks that survived thanks to the federal bailout are now flooding Washington with lobbyists to defeat financial reform, without taking responsibility for the havoc and economic losses they caused.

"Wall Street just hasn't gotten the message," said Richard Trumka. "They [banks] all helped to create the crisis. They all helped destroy 11 million [American] jobs. And quite frankly, they should start paying to create jobs that they destroyed.

In fact, many recipients of federal bailout money are repaying the loans with interest, minimizing government losses and, in some cases, giving the U.S. Treasury a modest profit on the initial layout of funds. Nevertheless, no one is arguing that overall effect of the financial crisis has been anything but devastating to the U.S. economy and its workforce.

You May Like

Philippines, Muslim Rebels Try to Salvage Peace Pact

Peace process faces major setback after botched military operation to find terrorists results in bloody gunbattle between government forces, Moro Islamic Liberation Front fighters More

Republicans Expect Long, Expensive Presidential Battle

Political strategist says eventual winner will be one who can put together strongest coalition of various conservative groups that make up Republican Party More

Video New Wheelchair Is Easier to Use, Increases Mobility

Engineers have come up with a lever-operated design that makes use of easily accessible bicycle technology More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Liberia's Almost Last Ebola Patient Grateful but Still Grievingi
X
Benno Muchler
March 26, 2015 3:41 PM
Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video US, South Korea Conduct Joint Military Exercises

The Eighth U.S. Army Division and the Eighth Republic of Korea Mechanized Infantry Division put on a well orchestrated show of force for the media this week during their joint military training exercises in South Korea. VOA’s Seoul correspondent Brian Padden was there and reports the soldiers were well disciplined both in conducting a complex live fire exercise and in staying on message with the press.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.
Video

Video Young Filmmakers Shine Spotlight on Giving Back

A group of student filmmakers from across the United States joined President Barack Obama at the White House this month for the second annual White House Student Film Festival. Fifteen short films were officially selected from more than 1,500 entries by students aged 6 through 18. The filmmakers and their families then joined the president and a group of celebrities for a screening of their films. VOA’s Julie Taboh reports.
Video

Video VOA Exclusive: Interview with Afghan President Ashraf Ghani

Afghan President Ashraf Ghani, during his first visit as president to Washington, gave a one-on-one interview with VOA Afghan Service reporter Said Suleiman Ashna, about his request for a change in U.S. troop levels, the threat from the Islamic State, and repairing relations with the United States and Pakistan. The interview was held at Blair House, late Sunday, in Pashto.
Video

Video California Science Center Tells Story of Dead Sea Scrolls

The ancient manuscripts were uncovered in the mid-20th century, and they are still yielding clues about life and religious beliefs in ancient Israel. As VOA's Mike O'Sullivan reports, an exhibit in Los Angeles shows how modern science is bringing the history of these ancient documents to life.
Video

Video Angelina Jolie Takes Another Bold Step

Hollywood actress and filmmaker Angelina Jolie has revealed she had her ovaries and fallopian tubes removed to lower her odds of getting cancer. Doctors say the huge publicity over her decision will help raise awareness about the importance of cancer screening. VOA’s George Putic has more

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More