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21 Jul, 2010 23:14

Obama signs new financial reform legislation into law

US President Barack Obama has signed into law a financial reform bill that will add new regulations to Wall Street and the financial sector.

The reform bill is weaker than many had original hoped, but it is stronger that the rules that were previously in place.

Each side can declare a victory, Wall Street to a certain extent and also Main Street, that now we have this new financial reform,” said Mike Norman, the chief economist at John Thomas Financial.

He argued, that even with the new bill, if bad policies are enacted there is always a possibility of a future economic collapse and that has policy changes been put in place earlier, the current crisis could have been avoided. Norman argues that generally the reforms a positive move.

“You still have the too big to fail, I think some people would say that was a failure itself in this bill and it exists because of the very heavy lobbying that was done by Wall Street” said Norman.

The bill creates a new regulatory group, but its agenda is vague. It is currently unknown who will run new Consumer Financial Protection Agency. Norman argued that it will take a while, possible a year or more, for the new rules and regulations to be laid out and put in place.

Some Republican members of Congress have already begun calling for a repeal of the bill because it will limit credit and hinder the economy. Norman said this was merely a political ploy and a scare tactic.

Gerald Celente, the director of the Trends Research Institute, argued that there is indeed a need for a reform bill to prevent another financial crisis. However, this one is not it.

This is not the greatest financial reform since Great Depression. The greatest financial reform since the Great Depression was in 1999, the Gramm-Leach-Bliley Act under the Clinton administration that deregulated the financial reform that were put into place,” said Celente.

Celente argued that the banks and Wall Street approve of this bill because it is a white wash. “It does nothing to prevent the coming crash of 2010. The bigs only got bigger,” he said.

He argued that the before major reform can take place you have to “get the crooks out of the white house” and remove all Wall Street insiders from the government and administration.

They’re in bed and paid off. Just look at the numbers, they’re out there, how much money came from the financial sector and lobbying went on to water down this bill into the nothing white wash it is. The only one that to me who seems to have a firm grip on all this is Ron Paul,” said Celente.

He continued: “Ron Paul seems to be the only one with a firm grasp on how the Federal Reserve, for example, being the head of the consumer protection unit of this great finial reform, yea, how about putting the Bloods and Crypts in control of law enforcement.”

In addition, Celente said the too big to fail banks are still in place and that the American public will be forced to take on the bill when these financial institutions fail again. 

Dr. Richard Wolff, professor emeritus of economics at the University of Massachusetts at Amherst said the bill was weak and made major exemptions for Wall Street.

I would not agree that this is a very sweeping legislation. I think this is a victory for the banking sector. They are very happy that much less was done than even some of their more open minded people thought would be likely,” said Wolff.

Wolff argued that the legislation and the new regulators may lead to a “bureaucratic theater” that is merely pretence to controlling the financial sector.

The new legislation fails to address the true problem, the too big to fail institutions, which are actually bigger now than before, argued Wolff.

We actually have much bigger monster corporations now than we did before and nothing in this legislation changes that,” said Wolff.