Washington, July 21 (IANS) US President Barack Obama has signed into law the most sweeping financial industry reform legislation since the Great Depression, terming it insurance against the kind of meltdown that led to a brutal recession.
New regulations on Wall Street-type financial firms will not only help prevent another meltdown, but also establish ‘the strongest consumer financial protections in history’, he said before signing the bill Wednesday.
There is ‘no dividing line between Main Street and Wall Street,’ Obama asserted as close to 400 people including business leaders like Citibank’s Indian American CEO Vikram Pandit, lawmakers and consumer advocates watched.
‘The primary cause (of the economic crisis) was a breakdown in our financial system,’ Obama said, noting the financial industry meltdown nearly dragged down the American economy in 2008.
That breakdown, he said, was attributable in part to ‘unscrupulous lenders,’ firms like AIG that placed ‘massive, risky bets with borrowed money,’ and rules that ‘left abuse and excess unchecked’ while leaving ‘taxpayers on the hook if a big bank or financial institution ever failed.’
In the future, ‘if a large financial institution should ever fail, this reform gives us the ability to wind it down without endangering the broader economy.’
Obama vowed that because of the law, ‘the American people will never again be asked to foot the bill for Wall Street’s mistakes. There will be no more taxpayer-funded bailouts. Period.’
Considered Obama’s second major legislative victory after the health reforms, the bill passed over objections from Republicans who complained that it did not address the root problems that caused the meltdown.
In a statement following the signing, House Republican leader John Boehner said the bill ‘provides permanent bailouts for his Wall Street allies at the expense of community banks and small businesses around the country.’
It does ‘nothing to reform Fannie Mae and Freddie Mac, the government mortgage companies that triggered the financial meltdown by giving too many high-risk loans to people who couldn’t afford them.’
Obama also sought to reassure Wall Street and financial institutions that the reform will ‘foster innovation, not hamper it.’
‘It demands accountability and responsibility from everyone. It provides certainty to everybody from bankers to farmers to business owners to consumers.’
(Arun Kumar can be contacted at arun.kumar@ians.in)
