There is little doubt that deregulation of financial institutions (banks/brokerage firms/insurance companies) enabled their invention and proliferation of very risky 'investment' vehicles that ultimately led to the economic collapse in 2008. Since that financial debacle, attempts were made to better control and enforce regulations on the financial institution behemoths that engendered the crisis. Those attempts, like Dodd-Frank, have been slowly and systematically de-fanged by political friends of Wall Street. Once again, those elected officials, that are beholding to financial executives that manipulate the economy through gambling rather than investing strategies, are attempting to cut loose even more reins designed to hold this industry accountable and (hopefully) prevent another economic disaster.

From my perspective, I would like to see bank/brokerage/insurance companies broken up, fairly regulated, and I'm still waiting for a couple of the corporate bigwigs that engineered and enabled the 2008 meltdown to be thrown in federal prison and made to pay back the millions they made at the detriment to most Main Street investors who lost a big chunk of their savings and retirement funds because of these executives' actions. I definitely don't want to see a further softening or abolishment of regulations on an industry that does not act in good faith with average Americans' savings.

What do you think?



Republican's plan to weaken Dodd-Frank spotlights U.S. political divide

By Dan Freed

NEW YORK (Reuters) - The chair of the U.S. House Financial Services Committee on Tuesday proposed wiping out much of the U.S. regulation put in place after the financial crisis with a plan expected to ignite debate in the presidential election but flame out in Washington.

In a sweeping speech at the Economic Club of New York, Republican Representative Jeb Hensarling, from Texas, presented his ideas on weakening the 2010 Dodd-Frank Wall Street reform law just as polls opened in six states holding presidential primaries.

Hensarling told reporters at the speech he had not yet consulted with Donald Trump, the presumptive Republican nominee, but would meet later in the day with the real-estate tycoon who is also pressing to dismantle the massive reform law.

Outside more than a dozen protesters chanted "Main Street not Wall Street" in opposition to Hensarling's plan.

The plan would allow banks to choose between complying with Dodd-Frank or holding a much higher amount of capital. It would also throw out the Volcker Rule that restricts banks from making speculative investments and eliminate the authority of the Financial Stability Oversight Council consisting of regulatory agencies' heads to designate firms as "systemically important," also known as "too big to fail." That label triggers requirements to hold more capital and abide by stricter regulations.

In essence, Hensarling said his plan involved "far more loss-absorbing capital and far less federal control."

It would also maintain the law's section on derivatives and keep the Consumer Financial Protection Bureau created by Dodd-Frank albeit with a changed structure.

"I'm only replacing 89.7 percent of Dodd-Frank," Hensarling joked.

Few expect the plan, previewed in a video last week, to become law soon. While it could pass the Republican-controlled Congress, it would then have to be signed by President Barack Obama, who also signed Dodd-Frank into law.

But Obama leaves office in January and those vying to replace him, who also include former Secretary of State Hillary Clinton and Senator Bernie Sanders on the Democratic side, have distinct views on regulation and Wall Street.

"Those on the left who gave us Dodd-Frank believe in the principle that human nature is self-destructive and that people - except themselves, of course - are fundamentally ignorant," Hensarling said, demonstrating the political charge of his ideas.

Senator Sherrod Brown of Ohio, a Democrat mentioned as a possible vice presidential pick, shot back that Republicans seek "to make life easier for mega bankers and tougher for ordinary Americans." Brown added Hensarling's plan "underscores the collective amnesia of many in Congress and on Wall Street" about the crisis.

Meanwhile, Senator Elizabeth Warren, the Massachusetts Democrat who is a firebrand for stronger regulation, said at a hearing the plan should be called the "Wet Kiss for Wall Street Act" and that while "while most Republicans in Congress are debating not whether to run away from Trump - but how far and how fast - Congressman Hensarling is sprinting toward Trump Tower."

Trump has given few clues to how he would take apart Dodd-Frank and what he might put in its place. His campaign declined to comment on Hensarling's plan. Last week Obama said Trump would let companies do "the same stuff that almost broke our economy’s back."

Clinton has now secured enough votes for the top of the Democrats' ticket. She has proposed edging farther left of Dodd-Frank to break up large banks that take excessive risk, charge institutions a "risk fee," tax high-frequency trading, and create more oversight of "shadow banking."

The most liberal of the presidential contenders, Sanders wants to break up the largest banks, reinstate the Depression-era Glass-Steagall law that separated commercial and investment banking, and tax some speculation.

James Ballentine, head of congressional relations at American Bankers Association, the industry's lead trade group, said members of both parties "agree that parts of Dodd-Frank just aren't working."

"Any law that generates more than 24,000 pages of proposed and final rules will inevitably include problems that should be fixed," he said in a statement.

Last edited by Rongone (6/07/2016 1:53 pm)