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Financial Reforms: What It Means to the Banking Industry

A proposal for a complete regulatory overhaul is expected to be revealed this Wednesday and the Obama administration is expecting stiff resistance to certain aspects of the proposal from banking companies. Almost all areas related to banking operations will be touched by the proposed legislation; ranging from how consumers are charged on credit card debts to how exotic financial instruments are packaged.

The outcome of Obama’s proposed financial reorganization will have a large impact on how banks operate in the future. Varying interest on different segments of the economy, from business to consumers to the government needs to be ironed out. Talks about regulatory problems will likely dominate the discussions in Capitol Hill for the succeeding months.

At the center of the regulatory plan is the “white paper” as it is referred to by the administration. In essence, it aims to provide the Federal Reserve more oversight power when it comes to dealing with the largest players. The government wants the Fed to gain the authority to break-up important companies – similar to how FDIC operates failed banks – once it becomes a threat to the overall economy. In addition, the Obama administration also wants to create a new watchdog that will scrutinize consumer products more thoroughly.

Certain lawmakers want to consolidate power to a single regulatory agency but the president does not intend to pursue this route. Instead, the administration will allow several agencies to continue their operations. In fact, the only agency that will be abolished is the Office of Thrift Supervision. If the proposed consumer agency pushes through, the number of oversight institutions in the financial industry will remain the same.

Treasury Secretary Timothy Geithner is scheduled to appear before the Senate and House panels. Many expect him to be criticized and called to answer how regulators can create a process that will not simply bailout finance companies on the brink of collapse. Lawmakers also want more responsibility on the part of the banks. The issue of giving more authority to the Federal Reserve will also be a thorny issue given its past failures and culture of secrecy.’s New Weekly Themes

We have adopted a new strategy moving forward with this blog.  We want to tie in important happenings in our economy with the everyday life of all Americans.  To do this we will start with three weekly themes:

Monday’s Market Movers

This weekly theme will watch the global markets and discuss the significance they will play in our everyday lives.  Monday’s Market Movers will follow and examine how the markets will affect credit and lending on both the individual level as well as on the banking level.

Wednesday’s Washington Weekly

On Wednesdays we will examine important events from Capitol Hill and the White House to assess their direct impact on lending and credit.  We will look specifically at the enormous amounts of spending and how it will trickle down to the everyday lives of all Americans.

Friday’s Financial Fitness

On Fridays we will gear our theme towards helping readers better their financial and credit standing.  We will look at little things that can be done to better your credit score, save some additional cash, or help your borrower profile to get the loan you need.  The overall goal of Friday’s Financial Fitness is to get you into a healthier financial situation.

We will begin discussing these themes in the next week.  We will continue to grow and expand our themes based on the economic situation and the response from readers like you.

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