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

On Everest, Helicopters Rescue Stranded Climbers

Choppers transport some of more than 100 mountaineers trapped after deadly quake, avalanches More

Video Ten Years After Riots, France Searches for Answers to Neglected Suburbs

In 2005, a Paris suburb exploded into violence after two teenagers were electrocuted as they hid from police; since then, somethings have changed, others not More

US, Japan Announce Historic Revision of Defense Cooperation Guidelines

Nations say new guidelines will be 'cornerstone for peace and security' in Asia-Pacific region while also serving as 'platform for a more stable international security environment' 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.
‘Angel of the Migrants’ Helps Desperate Syrians Arriving in Europei
X
Henry Ridgwell
April 26, 2015 10:36 PM
Waves of migrants are continuing to arrive on the shores of southern Italy from North Africa. After their dangerous journey across the Mediterranean, they face an unknown future in Europe. In the Sicilian city of Catania there is an activist dedicated to helping the refugees on their journey.
Video

Video ‘Angel of the Migrants’ Helps Desperate Syrians Arriving in Europe

Waves of migrants are continuing to arrive on the shores of southern Italy from North Africa. After their dangerous journey across the Mediterranean, they face an unknown future in Europe. In the Sicilian city of Catania there is an activist dedicated to helping the refugees on their journey.
Video

Video Ten Years After Riots, France Searches for Answers to Neglected Suburbs

January’s terrorist attacks and fears of more to come are casting a spotlight on France’s neglected suburbs. Home to many immigrants, and sometimes hubs of crime, they were rocked by rioting a decade ago. Lisa Bryant visited the Paris suburb of Clichy-sous-Bois, where the 2005 violence first broke out, and has this report about what has changed and what has not.
Video

Video Gay Marriage Goes Before US Supreme Court

This week, the U.S. Supreme Court will hear arguments on whether gay people have a constitutional right to marriage. VOA’s Michael Bowman reports, the case could lead to the nationwide legalization of same-sex marriage, or a continuation of the status quo in which individual states decide whether to recognize gay unions.
Video

Video Study: Insecticide Damaging Wild Bee Populations

A popular but controversial type of insecticide is damaging important wild bee populations, according to a new study. VOA’s Steve Baragona has more.
Video

Video Data Servers Could Heat Private Homes

As every computer owner knows, when their machines run a complex program they get pretty hot. In fact, cooling the processors can be expensive, especially when you're dealing with huge banks of computer servers. But what if that energy could heat private homes? VOA’s George Putic reports that a Dutch energy firm aims to do just that.
Video

Video Cinema That Crosses Borders Showcased at Tribeca Film Festival

Among the nearly 100 feature length films being shown at this year’s Tribeca Film Festival in New York City are more than 20 documentaries and features with international appeal, from a film about a Congolese businessman in China, to documentaries shot in Pakistan and diaspora communities in the U.S., to a poetic look at disaffected South African youth. VOA’s Carolyn Weaver has more.
Video

Video UN Confronts Threat of Young Radicals

The radicalization and recruitment of young people into Islamist extremist groups has become a growing challenge for governments worldwide. On Thursday, the U.N. Security Council heard from experts on the issue, which has become a potent threat to international peace and security. VOA’s Margaret Besheer reports.
Video

Video Growing Numbers of Turks Discover Armenian Ancestry

In a climate of improved tolerance, growing numbers of people in Turkey are discovering their grandmothers were Armenian. Hundreds of thousands of Armenians escaped the mass deportations and slaughter of the early 1900's by forced conversion to Islam. Or, Armenian children were taken in by Turkish families and assimilated. Now their stories are increasingly being heard. Dorian Jones reports from Istanbul that the revelations are viewed as an important step.
Video

Video Migrants Trek Through Western Balkans to Reach EU

Migrants from Africa and other places are finding different routes into the European Union in search of a better life. The Associated Press followed one clandestine group to document their trek through the western Balkans to Hungary. Zlatica Hoke reports that the migrants started using that route about four years ago. Since then, it has become the second-most popular path into Western Europe, after the option of sailing from North Africa to Italy.
Video

Video US Businesses See Cuba as New Frontier

The Obama administration's opening toward Cuba is giving U.S. companies hope they'll be able to do business in Cuba despite the continuation of the U.S. economic embargo against the communist nation. Some American companies have been able to export some products to Cuba, but the recent lifting of Cuba's terrorism designation could relax other restrictions. As VOA's Daniela Schrier reports, corporate heavy hitters are lining up to head across the Florida Straits - though experts urge caution.
Video

Video Kenya Launches Police Recruitment Drive After Terror Attacks

Kenya launched a major police recruitment drive this week as part of a large-scale effort to boost security following a recent spate of terror attacks. VOA’s Gabe Joselow reports that allegations of corruption in the process are raising old concerns about the integrity of Kenya’s security forces.
Video

Video Japan, China in Race for Asia High-Speed Rail Projects

A lucrative competition is underway in Asia for billions of dollars in high-speed rail projects. Cambodia, India, Indonesia, Malaysia Thailand and Vietnam are among the countries planning to move onto the fast track. They are negotiating with Japan and the upstart Chinese who are locked in a duel to revolutionize transportation across Asia. VOA Correspondent Steve Herman in Bangkok has details.
Video

Video Scientists: Mosquitoes Attracted By Our Genes

Some people always seem to get bitten by mosquitoes more than others. Now, scientists have proved that is really the case - and they say it’s all because of genes. It’s hoped the research might lead to new preventative treatments for diseases like malaria, as Henry Ridgwell reports from London.
Video

Video Bible Museum Coming to Washington DC

Washington is the center of American political power and also home to some of the nation’s most visited museums. A new one that will showcase the Bible has skeptics questioning the motives of its conservative Christian funders. VOA religion correspondent Jerome Socolovsky reports.
Video

Video Afghan First Lady Pledges No Roll Back on Women's Rights

Afghan First Lady Rula Ghani, named one of Time's 100 Most Influential, says women should take part in talks with Taliban. VOA's Rokhsar Azamee has more from Kabul.

VOA Blogs