Bedrock Consumer Protections Once Were Flogged as ‘Exceedingly Dangerous,’ ‘Monstrous Systems’ That Would ‘Cripple’ the EconomyWASHINGTON - July 12 - As the nation approaches the first anniversary of the Dodd-Frank financial reform law, opponents are claiming that the new measure is extraordinarily damaging, especially to Main Street. But industry’s alarmist rhetoric bears striking resemblance to the last time it faced sweeping new safeguards: during the New Deal reforms. The parallels between the language used both then and now are detailed
in a report released today by Public Citizen and the Cry Wolf Project.
In the decades since the Great Depression, Americans acknowledged the necessity of having safeguards in place to prevent another crash of the financial markets, including the creation of the Federal Deposit Insurance Corporation (FDIC) and the Securities and Exchange Commission (SEC), and laws requiring public companies to accurately disclose their financial affairs. Although these are now seen as bedrock protections when they were first introduced, Wall Street cried foul, the new report, “Industry Repeats Itself: The Financial Reform Fight,” found.
“The business community’s wildly inaccurate forecasts about the New Deal reforms devalue the credibility of the ominous predictions they are making today,” said Taylor Lincoln, research director of Public Citizen’s Congress Watch division and author of the report. “If history comes close to repeating itself, industry is going to look very silly for its hand-wringing over Dodd-Frank when people look back.”
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In fact, the Dodd-Frank Wall Street Reform and Consumer Protection Act is designed to prevent another Wall Street crash, which really made it tough on everyone by causing massive job loss and severely hurting corner butchers and bakers, as well as retirees, families with mortgages and others. The Dodd-Frank law increases transparency (particularly in derivatives markets); creates a new Consumer Financial Protection Bureau to ensure that consumers receive straightforward information about financial products and to police abusive practices; improves corporate governance; increases capital requirements for banks; deters particularly large financial institutions from providing incentives for employees to take undue risks; and gives the government the ability to take failed investment institutions into receivership, similar to the FDIC’s authority regarding commercial banks. Much of it has yet to be implemented.
more Wall street reform act deserves implementation nowSection 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act was an anti-corruption game-changer tucked into a historic, comprehensive piece of legislation aimed primarily at overhauling the nation's financial regulatory structure. Since becoming law, anti-corruption and financial transparency proponents are still waiting for the law to be implemented.
Section 1504, also known as the Cardin-Lugar provision, of the Dodd-Frank Wall Street Reform Act would require oil, gas, and mining companies that must report to the SEC -- approximately 90 percent of the major internationally operating oil and gas companies in the world -- to disclose payments made to governments for the oil, gas, and minerals they extract. This would be a boon to anti-corruption workers trying to get the records straight when investigating bribery and corruption in developing countries. It also would serve investors looking to make informed decisions about their portfolios.
Of course, 1504 attracted industrial vitriol from the usual suspects -- companies used to doing business behind a cloak of secrecy were not thrilled at the prospect of having to open their ledgers. Industry concerns aside, the provision enjoyed strong bipartisan support from legislators, including Sens. Richard Lugar (R-Ind.); Ben Cardin (D-Md.); Patrick Leahy (D-Vt.); and Congressman Barney Frank (D-Mass.).
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Using Clawbacks to Punish Bank ExecutivesBuilding the CFPB (PDF)
Luckily, those trying to kill the bill aren't succeeding.
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