The United States Senate passes key financial reforms
New overhauls of US financial regulation have recently been given a seal of approval by the US senate. Mr Obama announced that the new governmental regulation would provide much stronger protection for consumers and that the economic mistakes of the past would not be repeated. Never again would the American people be forced to pay the cost of Wall Street’s catastrophic blunders - the root cause of the economic recession.
The new reforms are an enormous victory for the Obama administration, after many months of intense scrutiny from the Republican opposition. It is hoped that the new bill will prevent banks from taking dangerous risks resulting in debt problems and give the federal government the power to ’break up'major companies that become so vast in size that, in the event of an economic crisis, the failure of such companies would have severe repercussions for the economy. Banks will no longer be allowed to take part in ’proprietary trading’, which essentially involves placing bets on the financial markets with their own money. They will also be banned from investing more than 3 percent of their own capital to private equity and hedge funds or numerous other ’speculative businesses’. The 60 senators voted for the reform bill and only 39 opposed it, after it was passed by the House of Representatives early in July.
Obama reiterated his stance on the economy when he spoke of the need for basic ’common sense’, in order to protect working Americans and the national economy. The Federal Reserve hailed the reforms, describing them as a key step towards preventing another major economic crisis, such as the recent recession, from re-occurring in future years. The bill has been widely regarded as the most significant financial reform since Franklin Roosevelt signed the New Deal into law back in the 1930s.
The US mortgage crisis was one of the key stimulants of the global economic recession, which has since led to high unemployment and aggressive public spending cuts in many other countries such as Britain and Germany.
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