Senate Debates Financial Reform

“The Restoring American Financial Stability Act” (S. 3217) is a good start but must be strengthened as it is discussed in the Senate.  Read about the key ingredients to real financial reform.

Here are key ingredients to real financial reform:

A Strong Independent Consumer Financial Protection Agency (CFPA) that provides real, loophole-free protections for regular people against credit card fine print, incomprehensible trick mortgages, payday lending, and car dealers that get kickbacks.

Loophole-free Regulation of the Derivatives Market, and the establishment of a stock exchange-style system for derivatives that would make these now-secret trades transparent, and require that banks prove they have the funds to back their bets.  Read more about derivatives.

A Strengthened “Volcker Rule” and Limits on Proprietary Trading, as provided by the Merkley-Levin amendment.

A Cap on Bank Size, as provided by the Brown-Kaufman-Casey-Whitehouse amendment, which would put statutory limits on the size and leverage used by financial institutions.  Read more about the Brown-Kaufman amendment.

A Requirement that Securities Brokers Act in the Best Interest of their Clients.

Measures to Hold Credit Rating Agencies Accountable for contributing to the financial crisis by stamping AAA seals of approval on what were actually enormously risky products.  Read more about credit rating agencies.

Regulation of Private Equity and Hedge Funds to guard against what could be the next big bailout – with millions of jobs on the line.