President Obama Signed The Financial Reform Act Into Law: Will It Help?
Obama Signs The Financial Reform Act Into Law
“I proposed a set of reforms to empower consumers and investors, to bring the shadowy deals that caused this crisis into the light of day, and to put a stop to taxpayer bailouts once and for all. Because of this law, the American people will never again be asked to foot the bill for Wall Street’s mistakes.” -President Obama (Wednesday: July 21, 2010)
With those words, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law.
Most Americans and their financial advisors and/or financial planners would generally agree the American consumer’s taxes shouldn’t be used as a safety net by big business, but can we count on the new law to ensure Main Street never again has to pay for Wall Street’s risk-taking? It appears so, although we won’t feel the effects of the law until it is put into practice—and that will have to wait until the creation of the new Consumer Financial Protection Bureau (CFPB). Whoa… another federal “Bureau”. Yikes.
The U.S. Chamber of Commerce, however, warned the new law could further weaken American businesses: “Such a broad, sweeping bill epitomizes a law with unintended consequences that creates more uncertainty for American businesses,” said Chamber President and CEO Thomas J. Donohue.
So let’s look at what we do know: Under the new law, the government will have the ability to liquidate large financial institutions that fail, and other large institutions will pick up the tab. From a consumer standpoint, that certainly sounds better than a taxpayer bailout. Financial institutions that bundle mortgages and then sell them off will now have to keep a 5% interest in those bundles, which should discourage them from making and immediately dumping risky loans. Maybe the percentage should have been 15-20% interest…
Finally, the new law creates a Financial Services Oversight Council (FSOC), a watchdog group composed of existing government officials… Its primary job: to watch for gathering storm clouds on the horizon of the financial services marketplace, sound the alarm when regulatory gaps are identified, require supervision of non-bank financial companies whose imminent failure threatens U.S. financial stability, and shut down risky operations by large financial institutions.
We’ll keep the spotlight turned on the new financial reform law here on the AllFinancialAdvisors.com blog in the coming weeks and months, so bookmark us and check back to learn more about the law, all the palyers involved and its expected positive and negative effects.
NOTE: If you are already working with a financial advisor, wealth manager or financial planning professional – ask them what’s their take on this new law and its implications for your personal financial planning. If you are not currently working with a money manager or financial advisory firm – you can start your search now — by entering your Zip Code at the top of our home page. Best wishes in finding the best financial advisor for you.
Tags: comprehensive financial planning, Consumer Financial Protection Bureau, Dodd-Frank Wall Street Reform, Financial Advisors, Financial Planning, Financial Reform Act, financial services marketplace, Financial Services Oversight Council, large financial institutions, Main Street, personal financial planning, President Obama, U.S. Chamber of Commerce, U.S. financial stability