Financial Reform 2010: An Overview



Two years of economic crisis and four months of tense Congressional negotiations have come to a close on the financial reform bill.  It has been a long time coming, and as we look back over the past year, it's obvious that we have a lot to celebrate.  But we're not shutting down our financial reform shop - because as much as we'd like to declare victory and go on vacation, it's quite clear that the bill doesn't address all (or even most) of Wall Street's most urgent systemic problems.  Below are a few of the things we'll toast to, and our pledge to continue taking action - and action now.

First, we set the ground rules.

By the time financial reform legislation began to move in Congress, a year had passed since the crisis began.  The media had a short memory when it came to what caused the crisis; a few politicians seemed to have complete amnesia.  Our Make Markets Be Markets report was our way of reminding the country about what had happened - and exactly what we needed to do to stop it from happening again.  

Next, we revived two key ideas.

Elizabeth Warren's Consumer Financial Protection Agency was being called a 'poison pill' when Make Markets Be Markets took place.  But after receiving the unequivocal support of the leading financiers, economists, and regulators gathered that day, the CFPA became what it was always meant to be: a cornerstone of financial reform, responsible for protecting the consumers preyed upon by big banks and investment agencies.  Your mortgage shouldn't be a ticking time bomb in your bank account - and today, we feel more confident than ever that it won't be.

Senior Fellow Rob Johnson also played a critical role in highlighting the importance of derivatives regulation.  Over-the-counter derivatives trading in credit default swaps has already brought our economy to its knees; as Johnson testified before the House Committee on Financial Services, derivatives are "the San Andreas fault of the financial system."

Then, we fought day by day.

For four months, financial reform dipped and weaved between various political compromises.  Roosevelt's Fellows pushed every day to ensure that dense issues like derivatives reform and off-balance sheet accounting were both understood and appreciated.  If you, like Paul Krugman, followed Mike Konczal's coverage of the fight on Rachel Maddow and in his white paper series,  or caught Rob Johnson in Newsweek or on Washington Journal, you were among thousands of people who gained valuable insight from these financial market experts.  Behind the scenes, even more important work was going on - like their efforts to build the strong Volcker Rule proposed by Senators Merkley and Levin.

Now - we're getting ready for tomorrow.

Given where we were back in March, we couldn't be happier to see a reform bill that includes things once considered 'dead on arrival.'  Consumers will have a new force to protect them against predatory lending practices.  Derivatives will be better regulated.  And the door once shut to progress is finally, definitively opening to the wave of fresh ideas we need on Wall Street and in Congress.  We look most hopefully at that open door, because much remains to be done - there are still too many dark corners in the world of finance.  But a little light has been let in, and we believe there's more to come in the days and months ahead.

FDR once spoke of Americans who said, "'This can be changed.  We will change it.' ... Their hopes have become our record."

With hope, and with confidence, we are moving forward.