News / USA

US Financial Reform Proposal Sparks Debate

Michael Bowman

Does a proposed U.S. financial reform bill root out the causes of the 2008 financial meltdown and ensure against a repeat, or does it perpetuate a flawed system that pushed the United States to the brink of economic collapse?  Such is the debate surrounding a Democratic reform package in the Senate that has the backing of the Obama administration, but faces stiff opposition from Republican lawmakers.  

When it comes to overhauling the rules governing large private financial institutions, there is one point of broad bipartisan agreement: the meltdown of 2008 and the taxpayer-funded bailout it necessitated must never be repeated.

U.S. Treasury Secretary Timothy Geithner on NBC's "Meet The Press" program said, "You saw a range of terrible things happen: catastrophic failures in judgment by people running these institutions, catastrophic failures in basic protections governments have to provide.  And the consequences were devastating."

Under a 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 be restricted in the types of investments they can make, and large financial institutions would be required to contribute to a bail-out fund that would be held in reserve in case of a future meltdown.

In addition, according to Geithner, the federal government would have better tools to deal with failing institutions.

"We want a system that acts preemptively to prevent these things from happening: constrain risk-taking by these large institutions," said Republican Senator John McCain of Arizona, who spoke on "Fox News Sunday."  "If a large institution ever again manages itself to the point where it cannot survive on its own and has to come to the government for support, then the government will put it into receivership.  It will wipe out shareholders.  It will replace management.  We dismember it, we sell it off so it cannot exist again.  And we will make sure that the taxpayers are not exposed to a penny of loss."

But Republicans say the Democratic proposal is flawed.  They argue that establishing a bail-out reserve fund will serve to perpetuate high-risk financial dealings by large institutions, and say the bill does nothing to limit the size of private financial firms, making government intervention at taxpayer expense more likely when those firms get into trouble.

"We cannot see [allow] a regulator scheme, which would allow a repetition of the meltdown that we have seen.  We want to see a scheme that ensures the fundamental principle that never again is any institution [considered] too big to fail.  I do not think that this present legislation can guarantee that," he said.

Numerous other Republicans are on record saying they cannot support the Democratic bill in its current form.  But Senator Scott Brown of Massachusetts suggested that a pared-down version of the bill could attract bipartisan support.  

Brown spoke on CBS' "Face the Nation" program, saying, "I, like many others in my state and throughout the country want banks to be banks.  They do not want them to be casinos.  They do not want them to make risky bets on our money.  And I think this is an issue we can clearly come to common ground [reach bipartisan agreement] and just solve the problem."

Treasury Secretary Geithner says he has held exhaustive meetings with key Republicans to address their concerns, and that he believes financial reform will be enacted.

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