Financial Reform Bill: Can Democratic Legislation Prevent Future Bank Bailouts?
Obama says bill will make bailouts a thing of the past; Republicans disagree.
WASHINGTON, April 14, 2010— -- President Obama called on Congress today to pass financial regulatory reform, arguing that new laws are required to ensure that American taxpayers never again face the choice of either funding a bank bailout or plunging into an economic crisis.
The reform is needed, he said, because the existing system of risks and rewards is broken.
"If there's one lesson that we've learned, it's that an unfettered market where people take huge risks and expect taxpayers to bail them out when things go sour is simply not acceptable," Obama said.
Regulating banks is no simple task. Big banks are complicated and vast, with tentacles that stretch all over the world, offering countless types of financial products -- credit cards, investments, business loans, student loans, real estate, financing and securities, to name a few.
These financial behemoths take big risks that can earn big profits for stockholders and executives. But who pays for that risk-taking if they fall through?
JP Morgan Chase today posted a net income of $3.3 billion, just for the first three months of this year. That's a 57 percent increase over its net income from this time a year ago.
Two years ago, Chase took a $25 billion taxpayer bailout, which it has since paid back.
Democrats are pushing for new financial regulations, which the president says will prevent a bank bailout from happening again in the future. Republican leaders say the bill will achieve exactly the opposite.
"It is a bill that actually guarantees future bailouts of Wall Street banks," Senate Minority Leader Mitch McConnell of Kentucky said.
Democrats call the Republicans' response obstructionism, saying they are parroting talking points generated by GOP strategists.
As evidence today, Sen. Chris Dodd, D-Conn., the chairman of the Senate Banking Committee, quoted from a memo circulated by Republican message guru Frank Luntz.
"Let me quote the partisan memo: 'The single best way to kill this legislation is to link it to the big bank bailout,'" Dodd said.
