President Obama signed today into law the most sweeping reform of the financial system since the Great Depression. The Center for American Progress reports that the most important part of the reform "is more and better information for consumers and investors."
Better informed consumers and investors can more easily compare financial products. The result is that banks will have to offer more of what consumers need, such as loans for small businesses, and less of what they don’t need, such as costly and risky investments. The Consumer Financial Protection Bureau will make sure that financial products are properly labeled and advertised to consumers, creating better-informed consumers. And the Financial Stability Oversight Board will collect more information on financial market activities to identify spots in the market where too much risk is building up, thereby providing better information to investors.
This financial legislation also sets minimum standards in the form of minimum capital requirements for most financial institutions to make sure they are indeed healthy and can live up to the financial promises they make to consumers and businesses, investors, and each other. Better information for investors and stronger capital requirements will create well-functioning financial markets and help to better allocate financial capital to all kinds of productive businesses, small and large. The Obama administration’s new financial regulation thus creates a more level playing field between Wall Street gamblers and all productive businessesLear more about the legislation here:
Like Senator Russ Feingold, I worry the legislation does not go far enough. None-the-less, the legislation is sweeping and provides significant protections for the American people.
