The Financial Reform Bill - Good or Bad?

Discussion in 'Politics' started by Flopper, Apr 24, 2010.

  1. Flopper
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    Flopper Gold Member

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    The financial reform bill, unlike the healthcare bill has support from both parties. But to no ones surprise, there is quite a bit of disagreement on sections of the bill. The bill is not as large as the healthcare bill but is every bit as complex. Here are the major parts of the bill:

    · A derivative is a financial contract whose value is derived from some other factor. Simple examples of derivatives are stock options and future contracts. Other derivatives are far more complex. A key part of the legislation would force the trading of derivatives on public exchanges where regulators could see which banks have a hand in which deals. This trading was a 450 trillion dollar market! By comparison, this is about 30 times the GNP of the United States and over a hundred times the national debt. Most of this activity was done in private deals so when markets crashed in 08, no one knew who owed what to whom. The new regulations would give regulators the same oversight they have in other publicly traded markets. Most of the debate is not whether this oversight is needed but rather how it should be accomplished.
    · Another provision in the bill would allow the government to breakup failing banks gradually before they actually fail to avoid the Lehman and IAG debacles. The bill contains a 50 billion dollar fund for this purpose, but this may be dropped from the bill.
    · The bill also establishes a System Risk Council where regulators would look at the total risk to the system as opposed to only looking at their specific corner of the industry. It is still being debated as to how much power this council should have.
    · The bill also addresses the “too big too fail” issue by giving some banks an implicit taxpayer guarantee. This is another item that is hotly debated.
    · The bill would create a Consumer Financial Projection Agency, which would monitor how banks treat their customers. This has been hotly debated also.

    There may be more but this was all I could find.

    Is this bill needed? If so, what should be in the bill?


    http://www.twincities.com/politics/ci_14921067
    Financial reform fails to tackle real issues :: CHICAGO SUN-TIMES :: Steve Huntley
     
  2. PatekPhilippe
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    PatekPhilippe Senior Member

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    As long as the 50 billion dollar perpetual bailout fund is eliminated...it would be something I could support.
     
  3. Oddball
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    Oddball BANNED Supporting Member

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    Given the spate of bureaucracy completely unrelated swill crammed into the "health care" deform bill, I'm suspicious at the very least.

    If this bill follows true-to-form of the past several bloated power legislative grabs of the Bolshevist democrat empire, which I have no reason at all to believe otherwise, I'm against it on general principles.
     
  4. Toro
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    Toro Diamond Member

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    Its good.

    The bill will make derivatives more transparent and less risky by forcing traders to put up collateral on a daily basis.

    The $50 billion fund will ensure that the next time there is a big collapse - and there will be - then the banks will take the first $50 billion hit instead of the taxpayers. Without this fund, taxpayers will be on the hook for everything. Best that the banks at least have some of their own money at risk rather than relying solely on the taxpayers.
     
  5. Oddball
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    Oddball BANNED Supporting Member

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    Yeah, and how many hundreds-cum-thousands of pages of unrelated, and probably detrimental, authoritarian bilge will be wrapped around the few provisions you do like.

    IOW, how much bullshit are you willing to take with your little dollop of whipped cream?
     
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  6. elvis
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    elvis BANNED Supporting Member

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    when you say big collapse, do you mean like 2008?
     
  7. Oddball
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    Oddball BANNED Supporting Member

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    That's just plain old economically ignorant.

    Where do you think the banks are going to come up with the money to pay into that big (what will end up being) slush fund?
     
  8. elvis
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    elvis BANNED Supporting Member

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    the discount window?
     
  9. Soggy in NOLA
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    Soggy in NOLA Platinum Member

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    Kinda like all the cheering tha GM paid back the loans.... with TARP money!

    Oh boy... YAY!!!

    All this bill will do is ENSURE risky behavior as a mechanism will now be in place to bail them out, no matter what. It's a HORRIBLE idea.

    Not to mention it doesn't ppass the smell test.. especially now that it is looking more and more like the fix is in with GS.
     
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    Last edited: Apr 24, 2010
  10. Oddball
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    Oddball BANNED Supporting Member

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    HA!

    Count on every fee and interest rate for you going up, buddy.
     
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