- Feb 9,2010
- In: Finance
A Bill to Safeguard Consumers is Coming Soon
There will be regulations to rein in Wall Street and safeguard consumers. A bill to this effect would have been passed in the House. There are crucial points about the bill that would be debated on the floor of the House. The financial industry would criticize the bill.
Some of the changes that would be debated are how homebuyers should get mortgages or how large companies can undertake complicated financial transactions or how large FIs or financial institutions could borrow finance.
The Democrats were asking for certain measures that would help to fight foreclosures. They want measures that would enable judges to rewrite loans that would lower the borrowers’ monthly payments. This proposal was opposed by the bank lobby. It was passed by the House in the beginning of the year. But it did not get passed in the Senate. It fell short by 15 votes. Overall, 60 votes are required to pass a bill.
It may be noted that the Democrats have got frustrated at the pace with which loan modifications are taking place. The Obama government has now vowed to come down hard on lenders that failed to help troubled homeowners.
The Chairman of the House Financial Services Committee, Barney Frank, says that he wants to include an amount of $3 billion in the law in order to provide help to troubled homeowners who are at the risk of losing homes. Frank also observed that the money would be channeled of the $700 billion rescue fund. The Democrats Maxine Waters and Melvin Watt had pressed for the issue. They are the members of the black community and had threatened to withhold support if the Congress did not take steps to help the community in the recessionary times.
The broader legislation is targeted at preventing a repeat of the recession that happened last year. Experts say this is even worse than the Great Depression that had struck the nation in the ‘30s. This legislation will oversee that laws governing financial institutions are completely rewritten. The purpose is to see that the financial system is no longer exposed to threats like it happened in 2007.
The Federal Reserve would also exercise greater control over companies that could pose threat to the economy. The regulators could even dismantle the companies even if they are healthy. Even if large financial firms fail then they would be dissolved as well. The creditors would have to take the losses.