The focus of the nation’s attention may have been on healthcare reform in recent weeks, but on the heels of that legislative victory the Democrats are now planning to push through sweeping financial system regulations.
On March 23, the Senate Banking Committee advanced financial reform by releasing a bill sponsored by Senator Chris Dodd (D-Conn.). The highlights of the bill include the proposal to create the Financial Stability Oversight Council (FSOC) to "identify potential threats to the financial stability of the U.S." and counteract them. The agency would also have the power to break up a big financial institution that poses a "grave threat to financial stability."
Moreover, the legislation creates the Consumer Financial Protection Agency (CFPA) that is independent from banks’ veto power over consumer protections, writes and enforces rules against abusive lending practices and cover all providers, including payday and auto lenders.
In contrast with the healthcare legislation, the bill has some bipartisan support. In fact, Senator Richard Shelby (R-Ala.) commented that "Republicans want to reach a bipartisan agreement on substantive financial reform that protects taxpayers, strengthens our economy, and preserves the competitiveness of our financial markets."
He added that "over the coming days, my Republican Banking Committee colleagues and I will give chairman Dodd’s proposal the serious consideration it deserves."
The Senate action follows the vote in the the House of Representatives last December when that chamber passed its version of the financial reform bill on a party-line vote. That bill also creates a consumer protection agency, imposes new guidelines on hedge funds and on derivatives trading, and outlines procedures for unwinding failed businesses.