Wall Street Reform Bill – The Good, the Bad, and The Ugly

by Ben Hoffman

Wall St. Reform has passed the House and the Senate and is now ready to be signed by Obama. The Democrats had to appease a few Republicans and watered down the bill in order to get the 60 votes now needed to pass any kind of bill, since Republicans filibuster EVERYTHING, so it’s not a great bill, but better than nothing. It’s the Republicans blocking American exceptionalism in Congress and the American people have to settle for mediocrity.


The Restoring American Financial Stability Act of 2010, H.R.4173, is a step forward, but it does not go nearly far enough to prevent another financial crisis and to get Wall Street to invest in the productive job-creating economy instead of gambling on risky investments.

Too Big To Fail

This bill does not break-up too big to fail banks that nearly drove the entire economy off of a cliff nearly two years ago. Incredibly, three out of the four largest financial institutions in this country (Bank of America, JP Morgan Chase and Wells Fargo) are bigger today than they were before the financial crisis.

Credit Card Interest Rate Caps

Unfortunately, this bill does nothing to cap credit card interest rates. It is immoral and wrong that a quarter of American credit card holders are paying more than 20% interest on their credit cards.

Fed Transparency

On the positive side, the legislation includes Sanders’ amendment lifting the veil of secrecy at the Federal Reserve. This is a major victory for American taxpayers. Beginning on December 1st, the American people will finally know all of the names of the financial institutions, corporations, and foreign central banks that received over $2 trillion in secret loans and other financial assistance from the Fed. We will know the exact terms of this unprecedented financial assistance. And, in a little over a year from now, a comprehensive independent audit of all of the Federal Reserve’s emergency actions will let the American people will know if there were any conflicts of interest involving these secretive actions by the Fed.

In addition, we will also know the names and details of banks receiving assistance through the Fed’s discount window about once every two years which is also a positive step forward.

Sadly, Fed Chairman Ben Bernanke has refused to release any of this information to the American people, despite repeated requests from me and others that he do so. By adopting Sanders’ provision, Chairman Bernanke will finally have to understand that this money does not belong to the Federal Reserve, it belongs to the American people and the American people have a right to know where their hard earned taxpayer dollars are going.


This bill does not do enough to stop too big to fail banks from gambling trillions of dollars in risky derivatives and credit default swaps. This gambling led to the $182 billion bailout of AIG, the collapse of Lehman Brothers, the downfall of Bear Stearns and precipitated the worst financial crisis since the Great Depression.

Sen. Lincoln had a very good provision in this bill that passed the Senate to force big commercial banks to make a choice: stop gambling in risky derivatives, or lose access to cheap loans from the Fed and deposit insurance from the FDIC. Instead of doing this, banks will still be able to keep gambling a substantial amount of money in derivatives while having access to the discount window at the Fed and deposit insurance protecting them if their risky bets don’t pay off.

Credit Ratings Agencies

Sen. Franken had a very good provision to prevent conflicts of interest at the Credit Ratings Agencies that passed the Senate 64-35. Sanders co-sponsored this amendment. 92 percent of the AAA ratings issued in 2006 and 2007 by Standard and Poors, Moody’s, and Fitsch, later turned into junk status. The reason for that is mainly because Wall Street pays the ratings agencies a lot of money to issue these AAA ratings – and if they don’t receive a AAA rating, the Credit Ratings Agencies lose a lot of money. It’s like the movie industry paying critics for favorable reviews. The Franken amendment would have eliminated these conflicts of interest. Instead, the conference committee chose to study this issue for two years and after that period, conflicts of interest may still not be eliminated. That is unfortunate.

Volker Rule

The bill does a decent job banning most proprietary trading by banks (banks betting on derivatives for their own benefit) and that is a plus. This is known as the Volker Rule and Senators Merkley and Levin deserve a great deal of credit inserting this piece.

Consumer Financial Protection Agency

The Consumer Financial Protection Agency is good, but it could be much, much better. Unfortunately, it will be housed at the Fed which is kind of like putting the fox in charge of the henhouse. Sanders is disappointed that it won’t regulate interest rates on credit cards. But, it could have been much worse.

Read more…

11 Comments to “Wall Street Reform Bill – The Good, the Bad, and The Ugly”

  1. And absolutely nothing on Fannie and Freddie, or AIG…Gee I wonder why? 🙂

  2. indyfromaz

    Fannie and Freddie are the Democrats’ illegitimate children. They will never punish them. Just as Mr. Hoffman will never acknowledge them. It doesn’t fit the script he gets from the puppet masters. Everything must be blamed on Republicans and Wall Street. Everything is about all kinds of envy.

  3. Mr. Hoffman,

    ” Did Glenn Beck tell you to say that? 🙂 ”

    I would think you might have sympathy for Glenn. After Drug and Alcohol dependency he turned his life around. Isn’t that your story without the big money, the religion, and the success ?

    Actually I am pulling for you to turn your life around. Turn away from destructive things like the Democratic Party. Turn back to the light. I mean back to the right. You once were a Republican. We are a forgiving Party.

    You actually would be an ideal Conservative. The smartest ones are ex Liberals like Krauthammer because they know all of the tricks. 🙂

  4. [After Drug and Alcohol dependency he turned his life around. Isn’t that your story without the big money, the religion, and the success ?]

    I was a recreational user. Some of my friends at the time were definitely “dependent” but I didn’t. I just decided at one point that it was time to grow up, so I quit doing drugs, stopped drinking in excess, quit smoking, and went to college.

    [You actually would be an ideal Conservative. The smartest ones are ex Liberals like Krauthammer because they know all of the tricks.]

    You have to like to lie to be a conservative and have no integrity, whatsoever. I’m not sure what happened to Krauthammer. At one time, he was a respected journalist. Now he’s just a lying shill for the Republican party. Right-wingers regard him as their expert economist. He never even worked as an economist. He was a psychiatrist.

    While it’s true that I was once a Republican, that was before it disintegrated into the cesspool that it is now, more concerned with power than with doing anything good for our country. Face it, you can’t defend the Republican party without lying. It’s kind of like a religion or a cult.

  5. Mr. Hoffman,

    ” more concerned with power than with doing anything good for our country. ”

    More projection.

  6. Mr. Hoffman,

    ” Okay, name one thing the Republicans did for the good of the country in the past 30 years, excluding military actions. ”

    Kept Al Gore out of the White House in 2000. George W. Bush should win a Nobel Peaces Prize for that one . 🙂

    Seriously, Defeated Jimmy Carter Stagflation under Reagan. YES , YES, YES that did happen. In 2002 and 2003 under the twin punches of 911 and the bursting of the Dot. Com bubble George W. Bush turned the economy around.

    And do not give me your usual Democrat Spin . The proof is that Bush was reelected by a decent margin in 2004. As Mr. Carvill famously said ” it’s the economy stupid “. If Bush had done what the idiot you put in the White House has done, President Kerry might be in his second term. Thank God, that never happened .

    You must have left out military actions because, there is no contest between defeating Iraq, twice, and taking out an aspirin factory .

    • There IS no comparison between Clinton’s intervention in the Balkans and Bush’s wars. Clinton was successful, Bush was not.

      It’s highly debatable that Reagan’s policies were GOOD for America. He tripled the debt, allowed interest rates to skyrocket, which brought down inflation by making home ownership out of reach for many Americans. He started the massive exodus of jobs to third world countries.

      As far as Bush turning the economy around, that’s absurd. There was zero job growth for his first term and two years into his second term, we had the beginning of the deepest recession since the Great Depression. Plus he doubled the national debt.

      So, in other words, you can’t think of anything Republicans did for the good of the country. Here’s one: the Clean Air Act Amendments of 1990. Although the Democratic congress was responsible for authoring it, Bush Sr. did sign it into law.

  7. Mr. Hoffman,

    Good for the Country means good for the country to me. Good for the Country to you means, what ever fits your Progressive fantasies.

    But, please enjoy the dictatorial powers your Party has now. These will be known as the good old days. When you could run the Country down the crapper and then blame Republicans for their lame filibusters when nothing works.

    Your time on top is limited. Tic, toc. There is only so much incompetence the Country is going to take. Ask Jimmy Carter.

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