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Financial Reform Law Aims to Change Some Ways of Wall Street

September 3rd, 2010 at 02:46am Under Economy Report

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This is the VOA Special English Economics Report.

On Wednesday, President Obama signed into law the Wall Street Reform and Consumer Protection Act.

BARACK OBAMA: “These reforms represent the strongest consumer financial protections in history — in history.”

Together, the changes represent the biggest rewrite of financial rules since the Great Depression. At the heart of the two thousand three hundred pages in the bill are promises to protect average Americans.

Congress agreed to create a Consumer Financial Protection Bureau. But the Federal Reserve will pay for it. The central bank will budget about five hundred million dollars a year.

Travis Plunkett is legislative director of the Consumer Federation of America, a consumer rights group. He says this new independent office will have a lot of responsibility — and that is a good thing.

TRAVIS PLUNKETT: “We’re going to have one federal consumer financial protection bureau. If it succeeds, people will know it. If it fails, people will know it. And they will try to hold it accountable.”

The bureau will set rules for the marketplace and enforce existing laws. One goal is to keep home buyers from getting bigger loans than they can pay for. But two areas where the bureau will not have power is over auto lenders or banks with assets of less than ten billion dollars.

Financial interests spent millions fighting the bill. The House of Representatives passed its version in December. Last week the Senate voted final approval with the aid of three Republican senators.

House Minority Leader John Boehner called the financial reform bill “ill conceived.”

JOHN BOEHNER: “I think it’s going to make credit harder for the American people to get, clearly harder for businesses to get.”

But President Obama says Wall Street took irresponsible risks that threatened the financial system.

Under the new law, banks no longer can own or invest in certain trading operations. The government has new powers to seize failing financial companies. These include businesses that, during the financial crisis, were considered “too big to fail.”

And President Obama says the law does something else.

BARACK OBAMA: “Finally, 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 tax-funded bailouts. Period.”

Regulatory agencies will write hundreds of new rules for banks and other financial companies. This follows years of deregulation.

Opponents in Congress say they will try to block some measures in the new law. But even if those efforts fail, it is too soon to know just how strong the new rules will be.

And that’s the VOA Special English Economics Report, written by Mario Ritter.  You can comment on our program at voaspecialenglish.com.  And follow us on Facebook, Twitter, Youtube and iTunes at VOA Learning English.  I’m Steve Ember. I’m Steve Ember.

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Looking Back: Wall Street, a Year Later

January 21st, 2010 at 08:23am Under Economy Report

This is the VOA Special English Economics Report.

One year ago, the United States financial system was in danger of collapse. One of Wall Street’s oldest investment houses had just sought protection from its creditors. The Lehman Brothers bankruptcy on September fifteenth was a shock to the system, but not the only one.

Lehman Brothers’ headquarters in New York City on the day the company filed for bankruptcy

A week earlier, the government had seized Fannie Mae and Freddie Mac. These companies help finance most American housing loans. And one day after Lehman’s failure, the government decided that the huge insurer A.I.G. was too big to fail. The Federal Reserve rescued the American International Group with an eighty-five billion dollar loan.

But soon, credit markets around the world slowed to a halt on fears about the health of banks. By early October, Congress passed the Troubled Asset Relief Program, a rescue plan for the financial system.

Banks and other financial companies have received more than two hundred billion dollars. But ten banks agreed in June to repay almost seventy billion of that. And so far, the government has earned about four billion on its investments.

But taxpayers still own almost eighty percent of A.I.G. They also hold big shares of Citigroup and a number of other banks, as well as sixty percent of General Motors.

On Monday, the anniversary of the Lehman collapse, President Obama renewed his call for reform of financial supervision. He said in a speech on Wall Street that some of the “old ways” that led to the crisis have already returned.

BARRACK OBAMA: “That’s why we need strong rules of the road to guard against the kind of systemic risks we have seen. And we have a responsibility to write and enforce these rules to protect consumers of financial products, taxpayers, and our economy as a whole.”

Fed Chairman Ben Bernanke said Tuesday that the recession “is very likely over at this point.” But he said the labor market could remain weak through next year.

Next week, leaders of the world’s largest economies will meet in Pittsburgh, Pennsylvania. They will discuss economic policies and ways to strengthen financial regulation after the crisis. But the Group of Twenty summit also comes as the United States and China face a growing trade dispute.

Last week the Obama administration placed high import taxes on Chinese tires. The aim is to stop what American officials call a “harmful” increase in tire imports. China, in turn, said this week that it will investigate imports of American chicken products and auto parts. China also asked the World Trade Organization to intervene, to avoid a trade war.

And that’s the VOA Special English Economics Report, written by Mario Ritter. I’m Steve Ember.

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