In June 2009, in the wake of the 2008 financial crisis, the Obama administration announced the most sweeping overhaul of the country’s financial regulatory system since the Great Depression. From the outset, the proposed financial reform has been met with criticism from both sides—some critics arguing that the reformation calls for too much regulation, while others arguing that it does not call for enough fundamental change in the financial systems. As we discussed in our June 24, 2009 article, the Obama Administration’s plan provided a broad outline for a refined regulatory system, but left much of the details to be filled in by Congress.
In December 2009, and after much debate, the House of Representatives passed its version of the reform legislation, marking a milestone in the Obama administration's efforts to rein in the abuses that contributed to the 2008 financial crisis and to prevent similar failures in the future. Now in the Senate for approval, the financial system overhaul has again been met with division among party lines.
On both Monday and Tuesday of this week, the proposed legislation was blocked from moving forward on the Senate floor, and there has been no visible sign that either party will budge. However, despite partisan maneuverings, both sides have expressed confidence that they will eventually work out a proposed legislation that gains bipartisan support. Lawmakers from both parties have emphasized that nobody wants to experience a repeat of the 2008 financial crisis that nearly collapsed the U.S. economy.
Importantly, should the Senate pass its version of the financial regulatory legislation, the difficulties will not end there. Indeed, there are potentially significant differences between the House and the Senate versions of the legislation, and the two Congressional chambers will have to work out those differences once the Senate passes its own version of the legislation.
Although the Obama administration’s financial system regulatory overhaul has been met with criticism in its details, one thing remains constant: our country’s financial industry needs some sort of regulatory reform to help prevent a repeat of the 2008 economic meltdown and the bailouts that necessarily followed.