The Latest Loopholes in Financial Regulatory Reform

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Friday, December 11, 2009 at 9:27 am

Today’s loophole alert regarding financial reform comes from The Wall Street Journal, which points out that USAA, an insurer that serves military families, quietly won an exemption from tougher provisions proposed as part of a massive regulatory overhaul bill. And that’s not to mention General Electric Co. and Pitney Bowes, which were also spared.

USAA, one of the country’s 50 largest federally insured financial companies, has one of Washington’s more aggressive lobbying operations. It spent $5 million on lobbying in the first nine months of 2009, according to government filings, more than larger rivals such as Bank of America Corp. and Wells Fargo & Co. Its political-action committee also gives generously to lawmakers.

Adam J. Levitin, an associate professor at Georgetown Law Center, said by exempting some companies, others will demand similar treatment. “There’s a slippery slope,” he said. “Just because a party is a good party today, that doesn’t mean its going to be a good party in the future.”

Lawmakers also struck a deal late Thursday night on a modified form of an amendment pushed by bank-friendly Democrats that would still allow federal laws to override stronger state protections, The Washingon Post reports.

One key change approved Thursday night was the addition of language that would permit federal laws governing consumer protection to continue to preempt those set by individual states. The bill that arrived on the House floor would have allowed states in most cases to impose tougher restrictions, using federal standards merely as a floor rather than a ceiling. The financial industry has lobbied relentlessly against that structure, saying it would saddle national banks with layers of burdensome bureaucracy and cause confusion among consumers.

Rep. Melissa Bean (D-Ill.) and other moderate and business-friendly Democrats threatened earlier this week to stall the bill if Bean’s preemption amendment did not get a hearing on the House floor. After a flurry of meetings between top House Democrats and Treasury Department officials, the groups reached a deal: A modified form of Bean’s amendment could proceed. In addition, it would be folded into a broader amendment put forward by Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee.

“It’s clearly a victory for the banks,” said Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group.

Those victories seem to be adding up, don’t they? Softening preemption really hurts, as evidence begins to show that stronger state anti-predatory lending laws prevented foreclosures, until they were preempted by the Office of the Comptroller of the Currency. But people who didn’t lose their homes to foreclosures due to strong state protections aren’t likely to have a lobbying group with money to hand out.

In the meantime, the bill doesn’t lay a hand to ratings agencies, and it includes enough loopholes in the draft of reforms for derivatives trading “to drive Goldman Sachs right through it,” said L. Randall Wray at New Deal 2.0.

Loopholes and all, the full House is expected to vote on a final package as early as today. The reforms keep getting referred to as the largest overhaul of the financial regulation system since the Great Depression. With all the apparent loopholes, it may be time to change that description. And there will likely be more to come, once the legislation lands in the Senate.

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DOUGLASFIELD
Comment posted December 13, 2009 @ 7:45 pm

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THE WORLD IS ALWAYS IN NEED OF POSITIVE CHANGE,NEW ENLIGHTENMENT, AND INTERNATIONAL PRESIDENTIAL LEADERSHIP.OUR TWO SPECIAL PRESIDENTS OF BOTH OUR UNIQUE COUNTRIES HAVE A WONDERFUL OPPORTUNITY TO SET A NEW AGENDA OF LOVE,PEACE AND FORGIVENESS FOR THE REST OF THIS SILLY & VIOLENT WORLD TO BE INSPIRED BY…

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DOUGLASFIELD
Comment posted December 14, 2009 @ 12:45 am

IF OUR U.S. MIDDLE~CLASS AND WORKING POOR AMERICANS ONLY HAD THEIR OWN REP MELISSA BEAN (BACKERS) LOBBYING ON THEIR BEHALF IN THIS THE PEOPLES U.S.CONGRESS AND WHITE~HOUSE…. THEN ALL WOULD BE WELL THIS HOLIDAY SEASON IN PENNSYLVANIA, GEORGIA AND PERU……………………

LETS ALL HOPE AND PRAY THAT THESE 3 GREAT CHRISTIAN SOCIETIES OF PERU,AMERICA AND THE VATICAN BECOME WILLING AND CAPABLE OF UNITING 2 BRING GOOD~WILL TO MANKIND IN THE AMERICA~S DURING THIS CHRISTMAS AND NEW~YEARS HOLIDAY SEASON ???

LAWYERS FOR POOR AMERICANS WISHES HAPPY HOLIDAYS TO ALL THE BEAUTIFUL PEOPLE OF PERU AND THEIR CONTEMPORARY AND PRAGMATIC PRESIDENTIAL LEADER ALAN GARCIA.

SINCE IT IS THE CHRISTMAS HOLIDAY SEASON,LAWYERS FOR POOR AMERICANS THOUGHT MAYBE OUR FRIENDS IN AND OUT OF GOVERNMENT IN PERU AND AMERICA MIGHT NOW HAVE AN INTEREST TO SERIOUSLY DISCUSS A POSSIBLE FUTURE TRADE OF PRISONERS BETWEEN BOTH OUR COUNTRIES ???

MOST ALL AMERICANS AND I'M SURE ALSO MOST CITIZENS OF PERU BELIEVE IN THE TEACHINGS OF JESUS CHRIST AND ARE ALL STRIVING IN BEING ABLE TO EMULATE THE LORD AND HIS LOVE FOR ALL OF MANKIND .

CURRENTLY AMERICA STILL HAS TWO BLACK AMERICAN CITIZENS ON DEATH ROW(TROY DAVIS OF GEORGIA AND MUMIA ABU~JAMAL OF PENNSYLVANIA)WHO JUST MIGHT BE POSSIBLY FALSELY EXECUTED IN THE NEAR FUTURE FOR CRIMES THEY NEVER COMMITTED.

SADLY EVEN THOUGH AMERICA IS CONSIDERED THE WEALTHIEST COUNTRY IN THE WORLD,WE STILL HAVE SEVERE PROBLEMS NATION~WIDE WITH OUR AMERICAN JUDICIAL SYSTEM NOT BEING NEARLY CAPABLE OF AFFORDING JUST AND FAIR LEGAL OPPORTUNITIES FOR ALL OUR POORER CITIZENS TO RECEIVE PROPER JUDICIAL TRIALS NATION~WIDE.

MILLIONS OF VARIOUS CITIZENS WORLD~WIDE ARE WELL AWARE OF THESE TWO U.S.LEGAL CASES OF TROY DAVIS OF GEORGIA AND MUMIA ABU~JAMAL OF PENNSYLVANIA AND HAVE ALSO VOICED THEIR CONCERNS INTERNATIONALLY FOR NEW AND JUST TRIALS TO BE OFFERED BOTH THESE AMERICAN MEN.

LAWYERS FOR POOR AMERICANS PROPOSES A CHRISTMAS PRISONER TRADE THAT ALL CHRISTIANS IN BOTH OUR FRIENDLY COUNTRIES COULD REJOICE IN.TROY DAVIS AND MUMIA ABU~JAMAL LIVES COULD BE SPARED THIS HOLIDAY SEASON IN EXCHANGE FOR THE POSSIBLE EARLY RELEASE OF OUR LOST AMERICAN AND HER NEWBORN CHILD~ LORI BERENSON.

MILLIONS OF AMERICANS AND CITIZENS OF PERU ARE AWARE THAT LORI BERENSON RECENTLY GAVE BIRTH TO A BABY BOY IN PERU IN MAY AND HOPE AND PRAY THAT MOST EVERYONE IN PERU AND AMERICA CAN FIND IT IN THEIR HEARTS THIS CHRISTMAS TO ALLOW THIS NEWBORN AND MOTHER THEIR FREEDOM WHILE SPARING THE LIVES OF TROY DAVIS AND MUMIA ABU~JAMAL.

PRESIDENT OBAMA AND ALAN GARCIA ARE BOTH REASONABLE AND CARING MEN WHO COULD INITIATE A WHOLE NEW WORLD CONCEPT EVERY CHRISTMAS AND NEW YEAR OF FORGIVENESS IN FUTURE PRISONER EXCHANGES BETWEEN VARIOUS COUNTRIES ???

THE WORLD IS ALWAYS IN NEED OF POSITIVE CHANGE,NEW ENLIGHTENMENT, AND INTERNATIONAL PRESIDENTIAL LEADERSHIP.OUR TWO SPECIAL PRESIDENTS OF BOTH OUR UNIQUE COUNTRIES HAVE A WONDERFUL OPPORTUNITY TO SET A NEW AGENDA OF LOVE,PEACE AND FORGIVENESS FOR THE REST OF THIS SILLY & VIOLENT WORLD TO BE INSPIRED BY…

LAWYERS FOR POOR AMERICANS IS A WWW VOLUNTEER LOBBY THAT SINGS OUT 4 MIDDLE~ CLASS AND WORKING POOR AMERICANS THAT CAN BE FOUND WITH ANY SEARCH ENGINE. ~WE BRING THE GOOD LIFE ON THE WWW TO MASSES OF POORER AMERICANS~ (424-247-2013)


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