The Restoring American Financial Stability Act of 2010 promises: "to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail", to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes."
But will it do that?
The 60 senators who backed the bill say it will -- with varying degrees of certainty and enthusiasm.
Here's Oregon's Jeff Merkley, one of the best players in the chamber on regulatory issues:
“Today the Senate sent a clear message that the financial security of families and businesses on Main Street must always come before the short-term profits of Wall Street. For decades, we let rampant deregulation and deceptive lending practices undermine families’ well-being, poison our financial system and ultimately bring the economy to its knees. This bill will help restore safety and soundness to our financial system and ensure that working families get a fair deal in their everyday financial transactions.
“I am pleased that the final bill includes the Merkley-Levin amendment that will ban high-risk trading inside the banks and put an end to conflicts of interest, where giants like Goldman Sachs bet against the very securities they were selling to their customers. This provision will encourage banks to return to the days where their main focus was lending. I can’t thank Senator Carl Levin enough for his tireless work to ensure that our banks won’t engage in high-risk trading and put our entire financial system at risk.
“In addition, I’m pleased that the bill includes provisions I championed to end some of the most egregious mortgage practices that led to the housing crisis and cost millions of families their homes. The bill will ban steering payments, liar loans, and prepayment penalties and give Americans the transparency they deserve when purchasing their own home. It will also create a Consumer Financial Protection Bureau dedicated to protecting consumers from financial tricks and traps, such as unfair overdraft fees and exploding interest rates.
“Now, this bill will not solve every problem in our financial system, and from my perspective, could be stronger in significant ways. Regulators have been given an enormous amount of responsibility to implement the bill as intended. In order to ensure that they hold up their end of the bargain, Congress needs to conduct vigorous oversight of government regulators and our financial markets.
“Overall, this bill sets our nation on the right path. There is more work to do to fix the failures of the past, but this bill lays the groundwork for a stronger and more stable economy and levels the playing field for our working families and small businesses on Main Street. I commend Senate Banking Chairman Chris Dodd for his dedication to getting this bill passed and restoring fairness for middle class families across America.”
Merkley joined 55 Democrats, two independents (Vermont's Bernie Sanders and Connecticut's Joe Lieberman) and three Republicans (Massachusetts' Scott Brown and Mainers Susan Collins and Olympia Snowe) in voting "yes."
Sanders offered a nuanced take on the measure, when went through the legislative wringer before emerging in final compromise -- and compromised -- form. The Vermonter called the overall legislation a “positive step forward” but said that much more must be done -- in the words of a statement released by his office -- "to end the greed and recklessness by the Wall Street financiers responsible for the worst economic collapse since the 1930s."
Sanders complained that:
* The bill does not breaking up banks deemed “too big to fail.” Incredibly, three of the four biggest banks in the country are larger today than they were before taxpayers bailed them out.
* The bill also fails to impose a cap on runaway credit card interest rates. Senators rejected an even more modest proposal to let states enforce their own usury laws.
On the plus said, says Sanders' statement, "the bill lifts the veil of secrecy at the clandestine Federal Reserve." In particular, the senator's statement says: "The legislation directs the Government Accountability Office to review all emergency actions by the central bank since the start of the financial crisis in 2007. The non-partisan research arm of Congress also will investigate apparent conflicts of interest involving the Fed and CEOs of the largest financial institutions in the country. The measure also makes the central bank divulge the identities of banks and other financial institutions that took more than $2 trillion in nearly zero-interest loans or loan guarantees."
Voting "no" were 38 Republicans and one Democrat in voting "no."
The Democrat, Wisconsin's Russ Feingold, may well be the Senate's steadiest critic of Wall Street and the big banks.
So why was he a "no"?
“At the outset of the debate over the financial regulatory reform bill, I made clear that my test for this bill would be whether it prevents another economic crisis," explained Feingold. "Unfortunately, this bill falls short. The reckless practices of Wall Street sent our economy reeling, triggered the worst recession since the Great Depression, and left millions of Americans to foot the bill. Despite these cataclysmic events, Washington once again caved to Wall Street on key issues and produced a bill that fails to protect the American people from the pain of another economic disaster. I will not support a bill that fails to adequately protect the people of Wisconsin from the recklessness of Wall Street.”
So who is right? There is truth to be found in all of what Merkley, Sanders, Feingold and other honest players are saying. Ultimately, Feingold is right that the measure does not adequately protect against the recklessness of Wall Street. It provides some tools for beginning to address the worst abuses, however. So let's give agree with Sanders, who is spot on when he says "much more" must be done.
And who will do it? Bet on Merkley, Sanders, Feingold -- and a few other honest players, such as Ohio's Sherrod Brown -- do be in the forefront of the fight. And it will be a fight.
The Restoring American Financial Stability Act of 2010 cannot be the last word when it comes to addressing the sins of Wall Street and the big banks. Because if it is then Feingold will surely be right when he warns that the American people from will not be spared "the pain of another economic disaster."