This week, the U.S. House of Representatives will consider a comprehensive set of reforms designed to respond to the recent economic crisis.  H.R. 4173, the Wall Street Reform and Consumer Protection Act, creates a new federal agency (Consumer Financial Protection Agency) tasked with regulating financial products and protecting consumers from unfair and abusive financial products and services.  As proposed, the CFPA would have broad regulatory authority over the financial products and services that companies and individuals can choose to own, buy or sell.

H.R. 4173 also overhauls the nation's financial regulatory system.  Some of the key provisions would:

  • create a Financial Stability Council to regulate large, interconnected financial firms;
  • establish a process for dismantling large failing financial institutions;
  • give shareholders a vote on pay practices involving executive compensation;
  • strengthen the powers of the Securities and Exchange Commission (SEC) to better protect investors and regulate securities markets;
  • regulate the over-the-counter derivatives marketplace;
  • reform mortgage lending and establish anti-predatory lending protections; and
  • create a Federal Insurance Office to monitor all aspects of the insurance industry.

Various congressional committees have been working for months to construct a better system to address systemic problems that led to the nation's most recent financial turmoil. One thing is for certain: this situation has stirred up debate about the degree of government regulation necessary to improve the financial system. But will these reforms work?


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