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  • An Iceberg of Financial Reform, but What Lies Beneath?

    A whopping 62 percent of Americans now say the United States is on the wrong track, yet President Barack Obama and liberals in Congress continue to steer the country in the same downhill direction toward bigger government. That runaway train picked up more speed this morning, as a House-Senate conference committee came to a final agreement on a Wall Street reform bill that’s packed with $19 billion in new taxes and fees on banks (which consumers will end up paying), a new consumer-unfriendly Consumer Financial Protection Bureau, and a complete failure to reform Fannie Mae and Freddie Mac (among the causes of America’s financial nightmare).

    Though the Wall Street reform bill is aimed at solving the problems that led to America’s financial collapse, it entirely ignores one of the major culprits responsible for our fiscal mess – Fannie and Freddie. As the Wall Street Journal reports, “Government-controlled Fannie Mae and Freddie Mac remain a multibillion dollar drain on the U.S. Treasury, and largely untouched by this proposal.”

    Given the sheer scope of the nearly 2,000 page bill, the biggest concern might be the unknown, unintended consequences that lie beneath. As Rep. Jeb Hensarling (R-TX) said during a conference committee meeting, “My guess is there are three unintended consequences on every page of this bill.”

    But what we do know about the bill is bad enough already. For starters, the bill creates a Consumer Financial Protection Bureau, which will likely do consumers more harm than good. As Alex Pollack of AEI writes:

    Any objective observer of government-agency behavior would predict that this will become a large, expensive, highly intrusive additional financial bureaucracy. With arbitrarily expanding demands, it will impose heavy costs on consumer financial services and requirements that likely conflict with those of other financial regulators.

    Customers are already seeing the effects of increased government regulations on banks — less money in their pockets. The Wall Street Journal reports that “Bank of America Corp. and other banks are preparing new fees on basic banking services as they try to replace revenue lost to regulatory rules, in a push that is expected to spell an end to free checking accounts for many Americans.” With more regulations handed down by the Consumer Financial Protection Bureau, consumers can expect more costs, less choice, and fewer consumer-friendly products (like debit cards) from their banks.

    Sen. Christopher Dodd (D-Conn.) said the bill “deals with every single aspect of our lives.” Given that we’ve only seen the tip of the iceberg. That’s a scary prospect.

    Posted in Ongoing Priorities [slideshow_deploy]

    7 Responses to An Iceberg of Financial Reform, but What Lies Beneath?

    1. Carle Riley, Escondi says:

      The complete lack of adherence to the Contitution leaves on slack-jawed. Every day now, I see multiple declarations and and unilateral actions that have the appearance of purposefully ignoring the Law of the Land. It's as if we have a dictator at the helm of our "Ship" whose purpose is to hurry up and destroy our country because he knows that he will be a one-term head of state. The only question that remains is: Will he be able to sail the ship fast enough to strike it against the other 90% of the ice berg. Examples are too numerous to name here.

    2. Barb, Illinois says:

      EVERY tax a corporation pays, EVERY ONE, is part of the cost of production. This is true for manufacturing, leisure, banking, transportation. EVERY tax is a cost of doing business passed on to each and every customer. EVERY tax or fee in this will will be paid by me and you. EVERY one!

    3. blanco, dallas says:

      Don't forget….we will all be created equal, but some are MORE equal than others.

    4. Jim Dunlap Yerington says:

      Looks like it is time to invest in rope. Then use that rope to chain our government officials to the Constitution.

    5. ChuckS. , Summit Ohi says:

      I find it odd that the basic fix all is another invented regulatory arm that requires even more taxpayer money to pay for appointed bureaucrats that will basically put the screws to the American Taxpayer. Was it not the regulations that were imposed upon Fannie and Freddy to begin with that caused this nightmare?

    6. Pingback: An Iceberg of Financial Reform, But What Lies Beneath?

    7. David Cote, Alexandria, VA says:

      “No one will know until this is actually in place how it works.” Senator Chris Dodd (D-Conn.) Another multi-thousand page bill that has not been read and another set of outcomes that can not even be imagined. While our current government makes a mockery of our Founders’ genius, its citizens suffer. Who booked this act? And why haven’t we sent it packing?

    8. French Hill, CEO, Delta Trust says:

      Another 2000 page bill…is that the only size they come in now? There is no way members or the public can process or properly assess the volume coming out of Washington. The Federal Register will soon absorb all the internet bandwidth available.

      The President keeps lecturing banks to lend more, BUT, he has curtailed credit availability by:
      – Taking $40 billion out of the system for FDIC assessments;
      – Supported cutting legal lending limits
      – Cut out Trust Preferrred capital source RETROACTIVELY for banks
      – Increasing capital requirements to comlete an acquisition
      – proposing to raise capital gains taxes, dividend taxes
      – decrease international tax competitiveness
      – Increasing regulations which reduce profits which reduce bank capital, thereby reducing lending
      – And, by threating every banker and investor with destruction of the rule of law (see Chrysler bonds, deriviative capital requirement proposal and trust preferred issue just to name a few), the “animal spirits” of the economy’s invisible hand are weak

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