Even just a decade ago, major pieces of legislation in the U.S. Congress would be just a few dozen pages long. But today, it seems like every time Congress passes an important bill it ends up being over a thousand pages long. In fact, the final version of the new financial reform law was over 2,300 pages. Overall, as we wrote about extensively in a previous article, this much-ballyhooed new law does a whole lot of nothing, but it turns out that lobbyists and special interests were able to insert a few nasty surprises that we are just now finding out about. But it was the same thing with the health care reform law. It was only after it was passed that most of us learned that it contained a provision that will force U.S. small businesses to collectively produce millions more 1099 tax forms each year. Now small businesses from coast to coast are screaming bloody murder about that provision but it is too late – the law has already passed. Unfortunately, there are some surprises in the recently passed financial reform law that are nearly just as bad.
So just what are those surprises?
Well, first let’s talk about what the financial reform law does not do. The financial reform bill was supposed to “fix” Wall Street and the financial system, but it did not do much of anything….
-It does nothing to address the problems with Fannie Mae and Freddie Mac.
-It does not eliminate “too big to fail”.
-It does absolutely nothing to eliminate the horrific bubble in the derivatives market.
-It does nothing to reform the organization most responsible for the recent financial crisis – the Federal Reserve. In fact, this new law actually gives the Federal Reserve even more power.
But it does create a ton of new paperwork and a bunch of new government organizations.
But was there any major law that Congress has passed over the last several years that did not increase the size and scope of government?
That is a good question.
In any event, let’s get to some of the nasty surprises contained in the new financial reform law….
*Barack Obama has been running around touting how this new law will “increase transparency” in the financial world, but it turns out that a little-noticed provision of the new law exempts the Securities and Exchange Commission from virtually all requests for information by the public, including those filed under the Freedom of Information Act.
Not that the SEC was doing much good anyway.
But now the SEC’s incompetence and the nefarious actions of those they are investigating will be hidden from public view.
So what makes the SEC so special that they get to block the public from seeing their records while other government agencies still have to comply with FOIA?
Talk about ridiculous.
But there is actually another little surprise contained in the new law that is even more nasty….
*Another little-noticed section deeply embedded in the financial reform law actually gives the federal government the authority to terminate government contracts with any “financial firm” that fails to ensure the “fair inclusion” of women and minorities in its workforce.
This section of the law, written by U.S. Representative Maxine Waters, is 1,261 words long and it establishes “Offices of Minority and Women Inclusion” in the Treasury Department, the Federal Reserve, the Securities and Exchange Commission and more than a dozen other finance-related agencies.
The directors of these new departments are tasked with developing standards that “ensure, to the maximum extent possible, the fair inclusion and utilization of minorities, women, and minority-owned and women-owned businesses in all business and activities of the agency at all levels, including in procurement, insurance, and all types of contracts.”
The maximum extent possible?
That sounds pretty strong.
So what kind of firms does this section apply to?
Well, according to Politico, this section is going to apply to just about anyone who has anything to do with the financial industry….
This applies to “services of any kind,” including investment firms, mortgage banking firms, asset management firms, brokers, dealers, underwriters, accountants, consultants and law firms, the legislation states. Every contractor and subcontractor must now certify that their workforces reflect a “fair inclusion” of women and minorities.
The truth is that this small section of the law represents a fundamental change in employment law in the United States.
And it is written so vaguely that firms are going to be tempted to go above and beyond in complying with it just so they are safe. In fact, many analysts are already saying that it could lead to an unofficial quota system.
In any event, hundreds of new federal government bureaucrats will be watching to make certain that these vague new regulations are fully implemented.
*It also looks like the new financial reform law is going to end the era of free checking accounts.
Well, it turns out that the new law really limits the amount of fees that banks can charge and the way that they charge them.
So banks have got to make their money somewhere. Wells Fargo and Bank of America have already announced new fees on checking accounts, and other banks are expected to follow their lead shortly.
What a mess.
Can’t Congress do anything right these days?
At this point Congress is so incompetent that if they would just sit there and do nothing that would be a vast improvement.
But that isn’t going to happen.
So what do you all think about this new financial reform law? Feel free to leave a comment with your opinion below….