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

Changing Under Pressure, IS ‘Potent’ as Ever

US intel officials describe Ramadi's fall as concerning, but say it isn't emblematic of larger effort to degrade IS capabilities More

Nigeria Fuel Shortage Shows Fragility of Africa’s Oil Giant

Although it is the largest oil producer in Africa, country has nearly ran out of fuel it needs to power its generators, cars and airplanes over the past week More

Arrested Football Officials Come Mainly From the Americas

US Justice Department alleges defendants participated in 24-year scheme to enrich themselves through corruption of international soccer 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.
3D Printer Makes Replica of Iconic Sports Cari
|| 0:00:00
...    
🔇
X
George Putic
May 27, 2015 9:31 PM
Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video 3D Printer Makes Replica of Iconic Sports Car

Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video US Voters Seek Answers From Presidential Candidates on IS Gains

The growth of the Islamic State militant group in Iraq and Syria comes as the 2016 U.S. presidential campaign kicks off in the Midwest state of Iowa.   As VOA’s Kane Farabaugh reports, voters want to know how the candidates would handle recent militant gains in the Middle East.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Film Festival Looks at Indigenous Peoples, Culture Conflict

A recent Los Angeles film festival highlighted the plight of people caught between two cultures. Mike O'Sullivan has more on the the Garifuna International Film Festival, a Los Angeles forum created by a woman from Central America who wants the world to know more about her culture.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video US-led Coalition Gives Some Weapons to Iraqi Troops

In a video released Tuesday from the Iraqi Ministry of Defense, Iraqi forces and U.S.-led coalition troops survey a cache of weapons supplied to help Iraq liberate Mosul from Islamic State group. According to a statement provided with the video, the ministry and the U.S.-led coaltion troops have started ''supplying the 16th army division with medium and light weapons in preparation to liberate Mosul and nearby areas from Da'esh (Arabic acronym for Islamic State group).''
Video

Video Amnesty International: 'Overwhelming Evidence' of War Crimes in Ukraine

Human rights group Amnesty International says there is overwhelming evidence of ongoing war crimes in Ukraine, despite a tentative cease-fire with pro-Russian rebels. Researchers interviewed more than 30 prisoners from both sides of the conflict and all but one said they were tortured. Henry Ridgwell reports for VOA from London.
Video

Video Washington Parade Honors Those Killed Serving in US Military

Every year, on the last Monday in the month of May, millions of Americans honor the memories of those killed while serving in the armed forces. Memorial Day is a tradition that dates back to the 19th Century. While many people celebrate the federal holiday with a barbecue and a day off from work, for those who’ve served in the military, it’s a special day to remember those who made the ultimate sacrifice. Arash Arabasadi reports for VOA from Washington.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.

VOA Blogs