This week, President Barack Obama signed a landmark law that affects the lives of every Coloradan: Wall Street reform. For some reason, the media only has given passing attention to this historic legislation. It seems that with other more sensational events competing for space, we did not get the full force of what this action will mean for us.
So what is in the bill? The Wall Street Reform bill includes the most stringent financial reforms passed since the Great Depression. It will make the big banks of Wall Street more accountable. And it will provide more economic security for families and businesses on the main street of Steamboat Springs and that of every other town and city in Colorado.
The bill includes the strongest consumer financial protections ever, and it creates an independent agency with the principle job of enforcing those protections and standing up for American consumers. That means that there will be one agency whose sole job is to make sure that Coloradans and all Americans get the protections they deserve. The agency also will set clear rules to hold banks, mortgage companies, payday lenders and credit card lenders accountable. It also reins in Wall Street abuses and requires accountability and responsibility from the financial sector. It therefore provides all Americans with a new level of certainty that taxpayers never again have to bail out the banks.
We Coloradans know how it feels when a credit card company suddenly hikes up our annual percentage rate or adds some fee we don’t understand. Wall Street Reform will give stronger protections for consumers against unfair credit card practices and offer free annual credit scores so we can stay on top of our finances.
Part of what got us into this financial mess was unscrupulous mortgage brokers who sought higher commissions by selling houses to families who simply couldn’t afford the high mortgage payments and didn’t understand the terms of their contracts. Under the bill, mortgage brokers will be prohibited from selling mortgages they know their clients can’t afford. Further, brokers who offer investment advice will have to act in the best interest of their customers and not their own financial interests.
Have you ever purchased something with your debit card thinking there were plenty of funds in your account to cover it, only to find out later that you overdrew from your account by a few dollars? Then your bank charged you $25 or more for that overdraft? Banks simply will not be allowed to do that anymore. There will be clearer rules about overdraft fees. In turn, businesses won’t be permitted to charge extra fees for debit card swipes that exceed the cost of processing the transactions.
Reform closes big bank loopholes and regulatory gaps — all the perks big banks took advantage of to get us into this mess in the first place. And the big banks and financial companies won’t be allowed to get so large that if one fails, it will create a tidal wave that puts our entire financial system at risk. Shareholders will have greater input about how much CEOs get paid. And best of all, there will be no more taxpayer-funded bailouts. If a company is going bankrupt, it will have to close.
The bottom line is that reform is about growing our economy in an efficient way and not letting greed take advantage of our communities.
Those who liked business as usual will complain about government getting in the way of the market. Well, “business as usual” stood in the way of financial stability for individuals and the country. “Business as usual” gambled away our dollars without any accountability.
Wall Street reform makes big business accountable, just like we try to be with our own checkbooks and the families we support. It is about time big business abides by the same standards.
Pat Waak is the chairwoman of the Colorado Democratic Party.