Failed Bank Bill Filled with Unintended Consequences for Main Street
Washington, D.C., May 19, 2010 – After the Senate today defeated a major banking regulation bill, CEI issued the following statement by John Berlau, Director of the CEI Center for Investors and Entrepreneurs.
Statement on Defeat of the "Restoring American Financial Stability Act"
Today, after hours of delay, the Senate still fell short of the 60 votes to close debate on a bill that supporters claim is needed to prevent the next financial crisis and rein in Wall Street. Senators of both parties who voted against cloture, thought the bill would either "get tough" on the wrong actors or fail to tackle the real problems. The numerous flaws of the bill add up to one basic problem. The bill’s omission of reform of Fannie and Freddie, combined with the overly-broad expansion of bank-like regulation of retailers and manufacturers, struck many Americans as missing the right target.
Many investors, entrepreneurs and consumers on Main Street expressed concern about the bill’s omissions and many unintended consequences of regulation, believing it was something that Senate leaders were trying to ram through. This due diligence that a bipartisan group of Senators correctly insist on performing will, hopefully, fix the bill’s numerous flaws. > Read the full statement on OpenMarket.org.
Berlau highlights areas where he and a wide variety of experts think the bill falls short. Among them are:
- The burdens on angel investors in start-up firms are partially lifted, but regulators still retain too much power to shut out legitimate “accredited investors.”
- “Financial companies” are defined too broadly, and as a result manufacturers and retailers could be regulated and taxed like banks.
- The lack of reform of Fannie and Freddie, combined with leverage restrictions for other financial institutions, could encourage even more risk to gravitate to these government-backed entities.
- Sen. Dick Durbin’s bipartisan but destructive amendment to put price controls on debit card interchange fees could shift processing costs to consumers
> Read more by John Berlau on financial regulation.