Obama poised to sign US financial overhaul

WASHINGTON — President Barack Obama aims to usher in a new era of consumer protections and banking restrictions Wednesday, checking off another legislative victory just before U.S. election-year politics overtake the rest of his major agenda.

By (AP)

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Published: Wed 21 Jul 2010, 9:44 PM

Last updated: Mon 6 Apr 2015, 10:37 AM

The president was expected to sign a sweeping overhaul of financial regulations, a signature achievement that comes nearly two years after Wall Street’s failures knocked the economy into the worst recession since the Great Depression of the 1930s.

The overhaul comes after Obama secured the first major legislative success of his presidency, a comprehensive health care bill. Obama is trying to get voters to focus on these accomplishments ahead of the November elections while Republicans emphasize the sluggish economy, high unemploymen and a growing government deficit.

Obama is going out of his way to spotlight the financial legislation’s creation of a consumer protection bureau, an effort to make an otherwise arcane and complex regulatory bill meaningful to Americans and to fend off Republican criticism that it amounts to an expansion of government.

“These reforms represent the strongest consumer financial protections in history,” the president says in excerpts released by the White House in advance of his remarks. “And these protections will be enforced by a new consumer watchdog with just one job: looking out for people — not big banks, not lenders, not investment houses in the financial system.”

The law also assembles a powerful council of regulators to be on the lookout for risks across the finance system. It places shadow financial markets that previously escaped the oversight of regulators under new scrutiny and gives the government new powers to break up companies that threaten the economy.

Large, failing financial institutions would be liquidated and the costs assessed on their surviving peers. Borrowers will be protected from hidden fees and abusive terms, but also will have to provide evidence that they can repay their loans. The Federal Reserve will get new powers while at the same time coming under expanded congressional oversight.

In an ironic touch, Obama will sign the bill in the massive Ronald Reagan Building, named after a president who championed deregulation. Joining him will be scores of consumer advocates, state and local government officials, business owners and executives, and members of Congress who supported the bill.

Among those expected to be featured are Sen. Chris Dodd and Rep. Barney Frank, the two Democratic committee chairmen who shepherded the bill through Congress and after whom the bill is named.

Obama will also be joined by a Vietnam veteran who was hit with bank overdraft fees and a teacher stung by retroactive interest rate increases on her credit card balance — two issues the legislation aims to remedy.

Though Obama and his top officials urged Congress to pass the law while the memory of the 2008 financial meltdown was still fresh, many of the law’s provisions will not take effect for at least a year as regulators scramble to write new rules and implement them.

“That will take some time, but it is worth it,” Deputy Treasury Secretary Neal Wolin said Tuesday.

Large Wall Street banks have welcomed some provisions in the bill, but have fiercely opposed others that would limit their banking business and cut into their profitability. Republicans have portrayed the bill as a burden on small banks and the businesses that rely on them and argue it will cost consumers and impede job growth.

“Millions of Americans are struggling to find jobs, and yet all they see in Washington are Democrats passing massive bills that, at their core, seem to have one thing in common: more job loss,” Republican Minority Leader Mitch McConnell said on the Senate floor Wednesday.

Obama has at least one contentious remnant from the bill to address. He must still nominate a director to the independent consumer protection bureau, an agency that became one of the bill’s flashpoints and was attacked by Republicans as a broad expansion of government power over private business.

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