Will Congress pass new banking regulations this year?

Posted May 18th 2009 4:40PM by Connie Madon
Filed under: Politics

There are new regulations being floated about concerning how to handle a "big bank" failure. Barney Frank on the House side will take up debate on U.S. Treasury Secretary Geithner's proposals for dealing with a new banking crisis.

The real elephant on the table is the fact that as it stands now, the largest banks are organized into bank holding companies, which stand outside current powers. Yes, at present the FDIC can move in and seize a bank, run it for a while before winding them down.The power to seize a major bank is so far not under FDIC authority. Under the Treasury's proposals, such authority would become law for what they call a "systemically important institution." Of course the key question is which banks would be termed "systemically important institutions."

Now the next question is who pays for all this? The current proposal calls for all banks, large and small, to share in the cost. The smaller banks are crying foul because they say that they already have a system in place and that the entire cost should be borne by the large banks that are directly affected.

Meanwhile, behind the scenes the lobbyists are going back and forth between banks, regulators and policymakers on what the legislation should contain and who should pay for it.

Do you believe that any meaningful legislation will be passed this year?

Tags: banking reform, BankingReform, Barney Frank, BarneyFrank, inthenews, Tim Geithner

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Reader Comments (Page 1 of 1)

5-18-2009 @ 5:21PM

clikdawg said...

"Meaningful", yes -- in the public interest, no.

5-18-2009 @ 6:57PM

william lindblad said...

Interesting idea. Glass Steagal was supposed to cover most situations. The power given the Fed to counter predatory lending is another. We have the SEC. We have OFHEO.

In order to get to the present -

The job of of OFHEO was to prevent Fannie and Freddie to be in to the taxpayer - period.
The job of the SEC was to prevent things like mortgage backed securities, under ALL of their various names. They are also supposed to prevent ponzi schemes, naked shorts,etc.
Glass Steagal is supposed to prevent where we are - period.
The Fed on predatory lending - easy, we did not have any!

Considering what is already on the books any jackass can conclude that what is really needed is some honest management and enforcement. Since this was sorely lacking any new legislation is sure to follow the old - ineffective.

You cannot legislate morality.

Nice idea though, and sounds good politically!