Financial Reform Law: What's In, and What's Out

(CBS)  President Obama signed the sweeping new financial reform lawafter two years of heated debate. It's designed to prevent another economic meltdown - one the White House hopes is too big to fail.

CBS News investigative correspondent Sharyl Attkisson reports the new law is nearly 880 pages -- packed with regulations and restrictions that touch most every facet of the economy.

So how exactly does Congress' creation solve the complex problems behind the financial storm?

Remember, big banks took big risks, straying from the primary role of lending money. They dove into risky trading, relying on mortgages that became worthless. Lending froze and taxpayers got stuck funding a $700 billion dollar bailout.

Now, bank investments will be more regulated. Banks will be barred from so-called "speculative trades".

Then there are the non-banks: financial firms that the government also deemed too big to fail. Taxpayers had to bail out AIG and others after they too, got stuck with toxic assets.

Now, new procedures can safely shut them down rather than bail them out.

"There will be no more taxpayer-funded bailouts. Period." President Obama said today.

But that's a major point of disagreement: Republicans argue the new law doesn't stop bailouts: it makes them permanent.

"For ordinary Americans who just wanted to see an end to the bailouts, this bill is no victory," said Senate Minority Leader Mitch McConnell, R-Ky.

That's because the government can still bail out firms of its choice -- lending them money, buying their assets, paying off creditors. That, says Republicans, exposes taxpayers to potential trillions of dollars. Their attempt to send failed firms through the normal bankruptcy route - was struck from the bill.

At the heart of the housing crisis were millions of people given loans they simply couldn't afford. Now, lenders have to verify that borrowers can make the payments. And lenders can be penalized for "irresponsible lending."

One big piece of the puzzle that's left out of this big reform: Fannie Mae and Freddie Mac. They're the government-backed private companies that made billions -- and whose executives made millions -- while buying risky mortgages.

Taxpayers have kicked in $145 billion dollars and counting. Republicans wanted them to wind down like other big financial firms in trouble but that was removed from the bill.

Experts are mixed on how well the new law will work.

According to an AP poll, 64 percent of Americans aren't confident the new law will stop a future meltdown.

[syberman3051]

o view an extensive interview of Warren that will appear in a new documentary about medical debt and personal bankruptcy go to :

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In this extensive interview you'll discover Warren is not the left wing radical some have made her out to be. On the contrary, she is a non-partisanl pragmatist, full of common sense sharpened by intelligence

[2_Small_2B_Helped]

Banks scream like they were on the sinking Titanic and the Goevernment throws them not a life line but picks them up in another luxury liner...while the rest of us are left trying to hang onto anything that floats and left to wait for the rescue ship will has yet to come. This notion of "too big to fail" is just another phrase to go into history with W's "Victory" banner, "Lone Gun Man" theory, Clinton's "I did not..." speech and the eleder Bush's "read my lips.." speech. Banks are not too big to fail because without our middle class pocket change that we deposit for less than 1% interest they would exist..we are like the collection of loose change jars many of us have at home, except that we are not just a couple of jars in one house but a collections of jars across every home in the US. Without us banks wouldn't exist or be necessary. In addition, when did your local bank have to turn into the place where your stock investment accounts were traded to and from or places that engaged in their own trading in search of the all mighty $. A company reports to Wall Street and the street says, " I don't think you earned enough and we will tell everyone else this" so the stock takes a hit...so now the company needs 20% instead of 10% growth in order to keep their price up...maybe next period the street need 30%...and so forth, when is profit considered "obscene". Meanwhile, in order to satisfy these figures, banks eat up other banks, financial houses, lending house and anything else they need to "grow" in order to keep "the street" appeased. When the company has no one left it can swallow up to grow....next comes "savings" time. Everyone out there not yet a "Lord of the Universe" with their face on Time, Forbes, Fortune or any other financial mag equivalent of US Weekly..gets the axe. In the end we still have to pay the taxes that saved their "too big to fail" rears and we have nothing to pay our own. Meanwhile these "Lords" get fatter bonuses because their companies feel that "these talented" people will go elsewhere if not grotesquely compensated. I guess I should also add "talented people" to the catch phrase list. These talented people screwed everything up for the rest of us below them and they get rewarded...it's like a basketball team allowed to play all their games with 10 guys while the other play with five and still be considered "the best". I say we should demand not ask from our government to cut its own budget by 1) bringing back out troops -- then using them to patrol our own border on land and sea. 2) Close down all our bases worlwide, there's no need for them now other than for "show of strength" 3)Since the bail out paid the bank's obligations to their creditors---I say they should wipe out all the obligations of not just those really hurting now with unemplyment but also of those who are struggling to make ends meet without damaging their credit scores, which we all know are used by potential employers and negative reporting could hurt future prospects.3)Every "pork" or "Special" project on the list of every congressman and representative should be voted on by the people--in order to do so, they should take out all the "legal speak" that generates War and Peace size reading material and instead pitch their requests on a bullet point format with "no fluff" or madison avenue marketing attached.4)We're their employers so we should get the right to say whether these people should get a raise or be fired before their terms are up---all this "campaigning" and knowing when you'll have to start running again only enhances the bickering that's happening now and resulting in an inefficient government. If these guys now that we may kick them out before a "term" runs out, then maybe we could get them to actually get some work done instead of lloking for sound bites and points. Also I think this whole "Party" mentality needs to go, because the "people" are never invited. In conclusion, if you want to serve the public...then serve the public, each person running should only be alllowed to spend X-dollars of their own money without any contributions, then the finalist will split evenly all contributions given to all campaigns. This will eliminate "corporate" sponsorship of individual candidates.

We the people should demand more!!

[apostasyusa]

I don't care about the Tea Baggers, I'm with the Democrats. We have a government that cares again. Thank you all who made it happen!

The President and Democrats promised that he would go after Wall St. regardless of the cost....and he is doing it. He promised to pass Health Care Reform and followed through. The President negotiated a nuke reduction deal with Russia, re-enginnered the Afghanistan war, began withdrawing our Troops from Iraq.

Banking reforms.
HealthCare reforms:
Nuclear arms agreements:
American Recovery and Reinvestment Act:
Lilly Ledbetter Fair Pay Act:
Credit Card Accountability, Responsibility and Disclosure Act:
Children's Health Insurance Reauthor-ization Act:
Weapons System Acquisition Reform Act:
Family Smoking Prevention and Tobacco Control Act:
Student loan reform:

Maybe you don't like everything Obama is doing but I do believe that he and the Democrats are actually delivering to their voters exactly what they said they would. Like'em or not, the Democrats delivered.

What has the Republicans Party done for its constituency? What, tax breaks for rich people? Did they deliver for average America? I don't think so.

Conservatives lost and the American people winning again. Keep on truckin Democrats.

[sternlearner]

FanMae and FredMac go unscathed, but we'll get plenty of misplaced protections from payday lenders? Was that a consolation prize? Mae, Mac, and Wall Street engineered and approved fraudulent loans called mortgages, not paycheck advances, which destroyed our economy. If this new bill was a child, it has a major case of ADD.

[apostasyusa]

Fannie and Freddie were just secondary market suckers like so many other banks, who got tricked into buying billions and billions in junk loan bundles. There was a scandal at Freddie and Fannie, an accounting scandal, but that has nothing to do with the mortgage crisis and economic recession.

[hickfrmmt]

I didn't read in the article or hear in the story that the banks themselves will contribute money to a fund to help struggling banks, not the taxpayers. To claim there will be endless bailouts is at best deceiving. There is also a seperate bill that deeals with reform of Fannie May and Freddie Mac, of course that was not mentioned by CBS or the Republicans. As to blaming either of these institutions for the recession, thats laughable. They didn't originate subprime loans,(although they stupidly bought them) they didn't invent mortgage based derivatives, they didn't oversee the lax regulation of the Bush SEC, and they didn't pass bills that essentially made banks self-regulating.

[Dave_P6]

Ah, I just love the conservatives who post on this site.

To hell with health care reform and financial regulation. What we need is a government that does a whole lot of nothing, then starts preemptive wars funded with a blank check and gives tax breaks to the wealthy.

[skywa11]

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[wfw3536]

This bill is a joke. It still recognizes banks that are too big to fail, so the government can still dump billions into these failed banks. It also does not do anything about Fannie and Freddie where this past mess started. The bill is over 2000 pages with 100's of rules that haven't even been written. When we know the full impact it will be a mess for regular folks. The big banks and Fannie and Freddie got off easy. For them it will be business as usual.

[cktirumalai]

Barack Obama signed the bill with eleven pens. Does the number have any significance?
Candadai Tirumalai

[chevyhotrod]

by tekjensen July 22, 2010 12:02 AM EDT
Obviously you didn't read the article. I could tell before your first sentence was finished. There's no reason to waste more time reading the rest.

I have read reports that the law is over 2500 pages.

http://www.politicsdaily.com/2010/07/15/financial-reform-will-become-law-so-whats-in-the-bill/

Robert Reich.Former Secretary of Labor, Professor at Berkeley
Posted: July 16, 2010 12:37 PM

The New Finance Bill: A Mountain of Legislative Paper, a Molehill of Reform

http://www.huffingtonpost.com/robert-reich/the-new-finance-bill-a-mo_b_649156.html

Really, well the author also claims that "Lending froze and taxpayers got stuck funding a $700 billion dollar bailout."

This is a bogus number.

WASHINGTON, July 21 (Reuters) - Increased housing commitments swelled U.S. taxpayers? total support for the financial system by $700 billion in the past year to around $3.7 trillion, a government watchdog said on Wednesday.

The Special Inspector General for the Troubled Asset Relief Program said the increase was due largely to the government?s pledges to supply capital to Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) and to guarantee more mortgages to the support the housing market.

http://patdollard.com/2010/07/bailout-reaches-37-trillion/