All Things Considered, Some Significant Financial Reform

The No-Nos kicked it up a notch yesterday with House Minority Leader Boner Boehner calling for repeal of financial reform--before it even passed:

"House Minority Leader John Boehner, R-Ohio, told reporters, "I think it ought to be repealed. There are common sense things that you should do to plug the holes in the regulatory system that were there, and to bring more transparency to financial transactions, because transparency is like sunlight. Sunlight is the best disinfectant."

Here's a surprise, Boehner doesn't know what the hell he's talking about. The financial reform bill passed yesterday isn't the sweeping re-structuring of the system passed in the 1930's, but in today's political climate it's about the best that we could get. And FDR wasn't dealing with opposition in Congress whose objective was to see the economy get worse in order to improve their political fortunes, like Boehner, McConnell et al are doing today.

Boehner and the Republicans are always screaming "read the bill." If they followed their own advice here's what they would find:  

* The Consumer Financial Protection Bureau will have an independent director [hopefully Elizabeth Warren] and independent authority to write and enforce rules barring unfair and deceptive financial practices.

* The law puts an end to "liar loans" that require no documentation of ability to repay the loan. It bans so-called "steering payments," handed to brokers who persuaded borrowers to take out more expensive loans than the ones they qualified for.

* The bill restricts the amount of trading a bank can do with taxpayer-backed funds, a reform known as the Volcker Rule. A last-minute compromise allows banks to trade three percent of such capital, but regulators have authority to restrict such trading if it appears to be purely speculative or poses a risk to the bank.

* The bill grants broad new authorities to the Commodity Futures Trading Commission, led by Gary Gensler, the administration's fiercest champion of reform... Not only did it get the lion's share of authority over derivatives, but it also gained additional authority to police fraud, manipulation and abuse.

Also on derivatives:

"The bill establishes record-keeping and reporting requirements for most derivatives. It also establishes a registered derivatives exchange and requires all of these derivatives to be submitted for clearance on an exchange."

The big banks aren't broken up, but:

"The bill establishes an intricate series of provisions to place ailing financial institutions and systemically significant nonbank financial companies into receivership. The bill also has provisions allowing the government to deal with systemically significant foreign firms and foreign financial subsidiaries of American companies. Had these provisions existed, the government could have dealt effectively with the disastrous problems at the American International Group, Bear Stearns and Lehman Brothers."

All in all, and considering the united opposition from Republicans and Wall Street lobbyists who were working against any reform, I'd call that quite an accomplishment. It's not perfect, but it does at least, to use a term from the health care debate, bend the curve back toward  regulation of the financial system and away from the culture of completely free markets that led us to the brink of collapse in 2008.