Friday, July 23, 2010

President Obama Signs into Law Financial ‘Reform’; Families Will Suffer

Law will ‘actually make even credit-worthy families and businesses unable to access the credit they need to invest in their futures.’

President Obama signed into law Wednesday the massive 2,400-page Dodd-Frank Wall Street Reform and Consumer Protection Act – the most consequential piece of legislation affecting the financial sector since the Great Depression.

Touted as a much-needed solution for Wall Street greed, President Obama said, “Because of this law, the American people will never again be asked to foot the bill for Wall Street’s mistakes. There will be no more taxpayer-funded bailouts. Period.”

Yet, before the ink had dried, the first signs of the law’s negative effects emerged.

The three largest credit-rating agencies – Standard & Poor’s, Moody’s Investors Service and Fitch Ratings – immediately alerted bond issuers not to use their ratings, as they assess their legal exposure created by the bill.

This will affect the $1.4 million bond market, made up largely of consumer loans.

New bond sales – required by law to include credit rating information in all mortgage, auto, student loan and credit card loan documentation — will come to an abrupt halt.

Unfortunately, most Americans are unaware of the new law – much less how it will directly affect their daily lives.

The bill was passed with nearly unanimous opposition by Republicans, citing the bill will hurt families still hurting from the recession.

“Millions of Americans are struggling to find jobs,” said Minority Leader Mitch McConnell, R-Ky., “And yet all they see in Washington are Democrats passing massive bills that, at their core, seem to have one thing in common: more job loss.

“The White House will declare this bill a victory. But for millions of Americans struggling to find work, for millions of small-business owners racing themselves for all the new regulations they’ll have to deal with, for ordinary Americans who just wanted to see an end to the bailouts, this bill is no victory.

Sen. Christopher J. Dodd, D-Conn., – co-author of the bill and chairman of the powerful Senate Banking committee – is not sure how the bill will affect the markets.

In an interview with The Washington Post, Dodd admitted legislators were uncertain exactly how the bill will work until it is challenged by another financial crisis.

“No one will know until this is actually in place how it works,” said a teary-eyed Dodd. “But, we believe we’ve done something that has been needed for a long time. It took a crisis to bring us to the point where we could actually get this job done.”

Dodd’s words echoed those of House Speaker Nancy Pelosi, D- Calif., when asked about the health care overhaul bill: “We need to pass ObamaCare so that the public can find out what’s in the bill.”
House Republican leadership has called for the financial law’s repeal.

“The real pain caused by this bill will be felt on Main Street,” said Republican Study Committee chairman Tom Price, R-Ga. “Ordinary companies will now face much higher costs if they try to hedge against common business risks like rising energy prices. And the new agency, supposedly charged with protecting consumers, will actually make even credit-worthy families and businesses unable to access the credit they need to invest in their futures.

“Dodd-Frank would not have prevented the current financial crisis, and it will not stop the next one. This is not financial reform. House Republicans introduced a plan over a year ago to fix the financial sector with common sense reforms aimed at the actual root causes of the crisis. Democrats instead chose to give Washington unprecedented control over Americans’ economic choices while ensuring the practice of taxpayer bailouts continues uninterrupted.”

Derek V. Baker, director of congressional affairs for Americans for Limited Government, said, “Only in Washington can a bill be signed in to law in response to one of America’s greatest financial collapses with two of the prime culprits of the collapse on hand to receive praise for their efforts. Though there are multiple reasons for the housing market collapse and subsequent financial meltdown that ensued, it is a fact that the government policies aggressive pursued and implemented by Sen. Dodd and Rep. Frank to rig the market and force lenders to meet artificial loan thresholds and quotas were a driving force behind the 2008 financial crisis as well.

“And yesterday, they got rewarded for their efforts with an ‘attaboy’ from the president of the United States.”

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