In a ceremony at the White House today, surrounded by policy experts and bankers, President Obama will sign the sweeping Dodd-Frank financial regulatory reform bill into law.
The final bill, more than 2,300 pages in length, directs regulators to create 533 new rules — applying to everything from debit cards to hedge funds to mortgage underwriting. It contains three central provisions. First, it provides the government with new powers to identify risky banking institutions and to shutter them, via a new systemic regulator. Democrats say this provision ends “too big to fail.” Second, the Dodd-Frank bill makes banks less dangerous, forcing them to keep more capital on hand, banning them from making risky trades on their own behalf and keeping them from investing heavily in vehicles like hedge funds. Finally, it creates a new consumer financial protection bureau, which will have the power to create and enforce new rules regarding financial products like home-equity loans and credit cards.
The White House pre-released only a short excerpt of Obama’s speech, indicating he plans to focus on consumer protections. “These reforms represent the strongest consumer financial protections in history,” he will say. “And these protections will be enforced by a new consumer watchdog with just one job: looking out for people — not big banks, not lenders, not investment houses — in the financial system. Now, that’s not just good for consumers; that’s good for the economy.”
Republicans argue that the bill will stifle the economy, reduce credit and overtax the banking system. Sen. Mitch McConnell (R-Ky.) remarked on the Senate floor this morning: “It’s almost as if it’s a prerequisite for any Democrat legislation: If it leads to more job loss, they’ll pass it. Americans are tired of this kind of ‘reform.’ Job stifling taxes, regulations, government intrusion. These appear to be the three pillars of every Democratic legislative effort. They’re also the three things lawmakers can do that are guaranteed to kill more jobs.”
Several media outlets have noted that Wall Street’s biggest banking titans — including Lloyd Blankfein, the head of Goldman Sachs, and Jamie Dimon, the head of J.P. Morgan Chase — were not invited to the signing.
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