Senate and Congress on Financial reforms: They sold out!

First the headlines and the subscript: New financial rules might not prevent next crisis! The most sweeping changes to financial rules since the Great Depression might not prevent another crisis.

The article was written by AP Business Writers Daniel Wagner and Stevenson Jacobs and posted on Yahoo.com. It lays out in very concise language the problem, the solution and why the solution might not work. For example, remember the Financial reform Bill passed by the Senate and the Congress was supposed to solve Too-big-to-fail institutions. Here's the excerpt on that particular topic:

The problem:
After bad bets on housing and other risky investments caused the collapse of Lehman Brothers, the government pumped billions into the largest banks to keep the system afloat.

The solution: The overhaul would let regulators close banks whose collapse could threaten the system.

Why it might not work:

The Senate bill lets regulators decide whether to protect the creditors of failed banks. Creditors might take a too-rosy view of a banks' finances if they feel they have nothing to lose in a failure. They might still lend to weak banks and raise the cost of eventually closing them down.
The bill does little to prevent big banks from getting bigger, meaning taxpayers might have to intervene again. A Democratic amendment to limit the size of banks was rejected amid opposition from banks such as Goldman Sachs.

The Bill passed by the Senate last week must be reconciled with the House version of th Bill. Interested persons should call their Congressmen and tell them to fix these gaps and close those loopholes!

To read the full article (and it is worth reading), click here.