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

Photogallery Americans Celebrate Thanksgiving With Feasts, Festivities

Holiday traditions include turkey dinners, 'turkey trots,' American-style football and New York parade with giant balloons More

Video For Obama, Ferguson Violence is a Personal Issue

With two years left in term, analysts say, president has less to lose by taking conversation on race further More

Video Italian Espresso Expands Into Space

When Italian astronaut Samantha Cristoforetti headed for the ISS, her countrymen worried how she would survive six months drinking only instant coffee 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.
To Make A Living, Nairobi Street Vendors Face Legal Hurdles, Physical Violencei
X
Lenny Ruvaga
November 27, 2014 7:05 PM
The Nairobi City Council has been accused of brutality in dealing with hawkers in the Central Business District - in order to stop them from illegally selling their wares on the streets. Lenny Ruvaga has more for VOA News from the Kenyan capital.
Video

Video To Make A Living, Nairobi Street Vendors Face Legal Hurdles, Physical Violence

The Nairobi City Council has been accused of brutality in dealing with hawkers in the Central Business District - in order to stop them from illegally selling their wares on the streets. Lenny Ruvaga has more for VOA News from the Kenyan capital.
Video

Video For Obama, Ferguson Violence is a Personal Issue

Throughout the crisis in Ferguson, Missouri, President Barack Obama has urged calm, restraint and respect for the rule of law. But the events in Ferguson have prompted him to call — more openly than he has before — for profound changes to end the racism and distrust that he believes still exists between whites and blacks in the United States. VOA White House correspondent Luis Ramirez reports.
Video

Video Online Magazine Gets Kids Discussing Big Questions

Teen culture in America is often criticized for being superficial. But an online magazine has been encouraging some teenagers to explore deeper issues, and rewarding their efforts. VOA religion reporter Jerome Socolovsky went to this year’s Kidspirit awards ceremony in New York.
Video

Video US Community Kicks Off Thanksgiving With Parade

Thursday is Thanksgiving in the United States, a holiday whose roots go back to the country's earliest days as a British colony. One way Americans celebrate the occasion is with parades. Anush Avetisyan takes us to one such event on the day before Thanksgiving near Washington, where a community's diversity is on display. Joy Wagner narrates
Video

Video Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Change

Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Mali Attempts to Shut Down Ebola Transmission Chain

Senegal and Nigeria were able to stop small Ebola outbreaks by closely monitoring those who had contact with the sick person and quickly isolating anyone with symptoms. Mali is now scrambling to do the same. VOA’s Anne Look reports from Mali on what the country is doing to shut down the chain of transmission.
Video

Video Ukraine Marks Anniversary of Deadly 1930s Famine

During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Hong Kong Protests at a Crossroads

New public opinion polls in Hong Kong indicate declining support for pro-democracy demonstrations after weeks of street protests. VOA’s Bill Ide in Guangzhou and Pros Laput in Hong Kong spoke with protesters and observers about whether demonstrators have been too aggressive in pushing for change.
Video

Video US Immigration Relief Imminent for Mixed-Status Families

Tens of thousands of undocumented immigrants in the Washington, D.C., area may benefit from a controversial presidential order announced this week. It's not a path to citizenship, as some activists hoped. But it will allow more immigrants who arrived as children or who have citizen children, to avoid deportation and work legally. VOA's Victoria Macchi talks with one young man who benefited from an earlier presidential order, and whose parents may now benefit after years of living in fear.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.

All About America

AppleAndroid