News / USA

Ending Business As Usual

U.S. lawmakers are considering a variety of reforms governing the finance industry, following the Wall Street crisis of 2008. But it still may not be enough to end financial abuses.

The trading floor at the New York Stock Exchange, one of the world's largest.
The trading floor at the New York Stock Exchange, one of the world's largest.

This isn't the first financial reform plan to come out of Congress.  But the chairman of the Senate Banking Committee, Connecticut Democrat Chris Dodd, has unveiled a new plan to overhaul America's financial system.  The goal, he says, is to end business as usual.

"It will create a system where honest citizens large and small can thrive on a level playing field," says the soon-to-retire Democrat.  "Where middle class families can find work and invest with confidence."

Sen. Dodd says the legislation contains bipartisan ideas, and represents the most sweeping reform plan since the 1930s.  The draft calls for an independent consumer financial protection bureau, one that would protect borrowers from predatory lenders.  There is a proposed Stability Oversight Council that would give regulators the ability to police the financial system.  And big institutions would be required to fund a type of holding bank with $50 billion that would be used to fund a future Wall Street rescue, should one be necessary.

That last part raises serious questions for Christie Sciacca, a financial consultant for LECG.

"Are you saying you won't allow them to fail," she asks, "that you'll use that money to support those banks and you won't allow them to be liquidated or you won't allow them to be 'unwound,' and therefore creditors will be protected?"

Ending Business As Usual
Ending Business As Usual

Of additional concern, banks would be prohibited from running their own investment portfolios or hedge funds.  And credit agencies would be held accountable and possibly liable for the ratings they give to bonds and investment agencies, the very agencies that pay them to do so.  

"The concern right now is that in order to get a rating, I pay the rating agency," says Sciacca.  "I think what people are hoping for and looking for is more independence.  That if I pay you for the rating, has the rating agency been co-opted as part of that process?"

Measures like these could mean higher bank fees and tighter credit for consumers if the bill becomes law.  But Doug Elliott of the Brookings Institution says something has to be done to improve the way the financial sector operates.

"It ws so expensive to clean up after this crisis.  We need more safety, even it it makes loans a little more expensive."

Ending Business As Usual
Ending Business As Usual

For his part, the bill's primary author, Sen. Chris Dodd, characterizes it this way: "This legislation will not stop the next crises from coming.  No legislation can of course, but by creating a 21st century regulatory structure for our 21st century economy, we can equip coming generations with the tools to deal with that crisis and to avoid the kind of suffering we have seen this country over the past number of years."

At Boston University's School of Law, Professor Cornelius Hurley says the proposed legislation still leaves plenty of loopholes for the financial world to manipulate.

"The investment bankers and the financial engineers still have the ability to go out and create products that nobody understands, sometimes including themselves," says Hurley.  "The credit rating agencies still have the same business model going forward, and yes there are some quality control measures, but the essential conflicts of interest are still there."

One other factor: the very financial industries U.S. lawmakers are trying to regulate donated $476 million to political campaigns in election year 2008.  So far this year alone, they have contributed more than $100 million.

You can watch all Philip Alexiou's "Money in Motion" video reports here.

You May Like

Multimedia Obama, Modi Break Nuclear Deal Deadlock

Impasse over liability issues had been stalling bilateral civilian nuclear cooperation; deal reached at start of US president's three-day visit to India More

WHO's Late Efforts in Tackling Ebola Highlight Need for Reform

Health experts debate measures to reform agency’s response to global public health emergencies in special one-day session on deadly outbreak More

One Tumultuous Year in Power for CAR's President

As sectarian violence raged across Central African Republic, interim President Catherine Samba-Panza has Herculean task: to end civil war and put country back on right track 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.
Worldwide Photo Workshops Empower Youthi
X
Julie Taboh
January 23, 2015 11:08 PM
Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video Worldwide Photo Workshops Empower Youth

Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video US, Japan Offer Lessons as Eurozone Launches Huge Stimulus

The Euro currency has fallen sharply after the European Central Bank announced a bigger-than-expected $67 billion-a-month quantitative easing program Thursday - commonly seen as a form of printing new money. Henry Ridgwell reports for VOA from London on whether the move might rescue the eurozone economy -- and what lessons have been learned from similar programs around the world.
Video

Video Nigerian Elections Pose Concern of Potential Conflict in 'Middle Belt'

Nigeria’s north-central state of Kaduna has long been the site of fighting between Muslims and Christians as well as between people of different ethnic groups. As the February elections approach, community and religious leaders are making plans they hope will keep the streets calm after results are announced. Chris Stein reports from the state capital, Kaduna.
Video

Video As Viewership Drops, Obama Puts His Message on YouTube

Ratings reports show President Obama’s State of the Union address this week drew the lowest number of viewers for this annual speech in 15 years. White House officials anticipated this, and the president has decided to take a non-traditional approach to getting his message out. VOA White House correspondent Luis Ramirez reports.
Video

Video S. Korean Businesses Want to End Trade Restrictions With North

Business leaders in South Korea are calling for President Park Geun-hye to ease trade restrictions with North Korea that were put in place in 2010 after the sinking of a South Korean warship.Pro-business groups argue that expanding trade and investment is not only good for business, it is also good for long-term regional peace and security. VOA’s Brian Padden reports.
Video

Video US Marching Bands Grow Into a Show of Their Own

The 2014 Super Bowl halftime show was the most-watched in history - attracting an estimated 115 million viewers. That event featured pop star Bruno Mars. But the halftime show tradition started with marching bands, which still dominate the entertainment at U.S. high school and college American football games. But as Enming Liu reports in this story narrated by Adrianna Zhang, marching bands have grown into a show of their own.
Video

Video Secular, Religious Kurds Face Off in Southeast Turkey

Turkey’s predominantly Kurdish southeast has been rocked by violence between religious and secular Kurds. Dorian Jones reports on the reasons behind the stand-off from the region's main city of Diyarbakir, which suffered the bloodiest fighting.
Video

Video Kenya: Misuse of Antibiotics Leading to Resistance by Immune System

In Kenya, the rise of drug resistant bacteria could reverse the gains made by medical science over diseases that were once treatable. Kenyans could be at risk of fatalities as a result if the power in antibiotics is not preserved. Lenny Ruvaga has more on the story from Nairobi.
Video

Video Solar-Powered Plane Getting Ready to Circumnavigate Globe

Pilots of the solar plane that already set records flying without a drop of fuel are close to making their first attempt to fly the craft around the globe. They plan to do it in 25 flying days over a five month period. VOA’s George Putic reports.
Video

Video How Experts Decide Ethiopia Has the Best Coffee

Ethiopia’s coffee has been ranked as the best in the world by an international group of coffee connoisseurs. Not surprisingly, coffee is a top export for the country. But at home it is a source of pride. Marthe van der Wolf in Addis Ababa decided to find out what makes the bean and brew so special and how experts make their determinations.
Video

Video Yazidi Refugees at Center of Political Fight Between Turkey, Kurds

The treatment of thousands of Yazidis refugees who fled to Turkey to escape attacks by Islamic State militants has become the center of a dispute between the Turkish government and the country's pro-Kurdish movement. VOA's Dorian Jones reports.
Video

Video World’s Richest 1% Forecast to Own More Than Half of Global Wealth

The combined wealth of the world's richest 1 percent will overtake that of the remaining 99 percent at some point in 2016, according to the anti-poverty charity Oxfam. Campaigners are demanding that policymakers take action to address the widening gap between the ‘haves’ and the ‘have nots’, as Henry Ridgwell reports for VOA from London.

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

All About America

AppleAndroid