The entire financial services industry got a regulatory nastygram from
the administration at 2 p.m. today when President Obama unveiled his
proposal for financial regulatory reform legislation, urging Congress
to pass the package by year's end.
In the hot seat are the financial institutions that peddled risky
loans, crummy credit card terms, over-the-counter derivatives, and
those pesky credit default swaps -- products and practices that, in
words Obama used earlier this year, triggered "a cascade of mistakes
and missed opportunities" that resulted in economic crisis.
Today's message: Sorry, boys, regulation is back.
The proposal is about protecting consumers: watching our backs when
we get mortgages, sign up for credit cards, and shop for insurance.
It's also about protecting our way of life. Included in the proposal
are sweeping regulatory changes for the institutions that exposed our
economy to untold risks.
Legislation like this affects all of us. And right now, you have the
opportunity to truly affect the outcome of the new world financial
The Motley Fool was selected by the White House to sit down with a
member of the President's Council of Economic Advisors on Tuesday to
discuss the proposal. More on that -- and how you can be involved in
our trip -- in a moment. But first, let's roll the tape.
White House to financial institutions: No more shenanigans!
the upshot: The administration wants to create a single agency to set
rules and regulations regarding transparency, accountability, and
fairness in financial products to protect consumers.
In a video released this morning,
Austan Goolsbee, senior economic advisor to the Prez, set the stage for
the president's 2 p.m. briefing. It's all about consolidation -- moving
consumer protection authority out of seven separate agencies and giving
authority and accountability to a new consumer protection agency (the
Consumer Financial Protection Agency, or CFPA).
The CFPA will also contain a Financial Services Oversight Council,
whose responsibilities will include being a watchdog for institutions
that have the power to bring down the entire system, identifying
regulatory gaps, and keeping abreast of financial innovations.
In other words, the next "credit default swap" isn't going to slip
by unnoticed. "Too big and failing" is not an option, and Daddy is
going to take away your car keys and ground you before he'll ever bail
you out of jail again. (You can read the official White Paper on Financial Regulatory Reform here.)
Uncle Sam needs Fools!
Shockingly (not!), the White House is getting a lot of pushback from financial institutions.
During a pre-announcement press conference call, Goolsbee revealed
that the financial industry's block-and-tackle efforts make health-care
lobbyists look amateurish by comparison.
Translation: We need you, dear voting public. "The president is
looking to amp up the public pressure on what changes are needed,"
Goolsbee said. "It's really important that we keep the focus on what is
in the public interest. Without that focus, this thing becomes just
another bill that is down in the bowels of the banking and finance
A call for questions/comments
of the engaged intelligence of the Motley Fool community, we have been
selected by the White House to sit down with a member of the
President's Council of Economic Advisors on Tuesday to discuss the
This is Washington's way of saying that they value the community of
investors that gathers here at Fool.com. We've got plenty of questions
about the White House's financial reform plans, but as ambassadors of
Fool.com, we want your voice to be heard.
© 2009 UCLICK, L.L.C.