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President and Congress Act for Historic Financial Reform

Congress passed historic legislation on Thursday to prevent the type of financial meltdown that crippled the U.S. economy in 2008. The new law includes the toughest restrictions Wall Street since the Great Depression. Congress tightened restrictions on banks’ lending practices and expanded consumer protections to ward off a repeat of the financial collapse.

Companies that threaten the economy could now be broken up by the government. Large, failing financial institutions would be liquidated, possibly ending the “too big too fail” mentality to which several large banks owe their existence today. The treasury secretary would lead a 10-member council of regulators to monitor companies whose large size or connections threaten financial disaster were they to fail. The law also creates a new agency to protect consumers’ financial transactions and investigate murky financial markets which previously escaped oversight by regulators. Oversight of mortgages, credit cards, short-term loans, and other financial products and services, will fall under a new independent office housed in the Federal Reserve.

The law gives the Federal Reserve increased powers, while simultaneously opening it to greater congressional scrutiny. Nearly all actors in the financial world will feel the effects of the bill. From Wall Street’s biggest banking and investment houses down to the smallest payday lenders, all must react to the new regulations. Big banks will need to reserve as much money as small banks in order to guard against future losses. Financial transactions from complex securities trades all the way down to debit card swipes will face new safeguards.

The costs incurred by the government to implement this new law will be partly paid by ending the Troubled Asset Relief Program (TARP), which will generate $11 billion.   


Call your Congressional Representative at 202-224-3121, or in the district office, and ask how they voted on H.R.-4173, Dodd-Frank Regulatory Reform Bill. Say thanks if they supported this historic action to protect consumers and the American economy.

July 2010

Last Updated: 07/26/2010

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