The Wall Street financial reform (2010) - Research Paper Example

Download file to see previous pages... The passing of the law was aimed at making the financial system of the United States more accountable and transparent in order to avoid similar situations in future and ensure that there is a working system in place to protect the money belonging to tax payers (Kolb 112). The law included such major topics as the creation of a bureau for protection of consumer finances, creation of an oversight council for financial stability, the limitation of complex and large instruments of finance and transforming the derivative market to assume a more transparent image. The law also included the introduction of oversight and new requirements for the agencies dealing with credit rating. It also gave company shareholders a say concerning the bonuses paid to their chief executive officers. All these components targeted to strengthen the economy of the United States and protect the consumer against the increased shrewdness of the business world (Kolb 114). Way back in the year 1933, a law called the Glass-Steagall act had placed what was seen as a wall of complete separation between brokerages and banks. The act was largely repealed in 1999 by another act that was aimed at modernizing financial matters in the country. The restoration of the Glass-Steagall act was regarded by some commentators as very vital, with some of them referring to it as the most functional component in the reform of Wall Street. However, the Democratic Party leaders in the house refused to permit an amendment by Maurice Hinchey, a member of the Republican Party. The amendment was meant to restore the Glass-Steagall act as part of the Frank bill of 2009 (Pezzuto 67). Later on in 2009, Hinchey introduced the restoration act of the Glass-Steagall act as a separate bill proposal. Despite the politics that has played on the restoration of the act, the Volker rule, which was introduced by the administration of president Obama has been viewed as the twenty first century version of the Glass-Steagall act. The rule establishes strict rules on banks against using their money in making risky investments. A few years earlier, in 2002, senator Sarbanes and representative Oxley proposed the Sarbanes-Oxley act. The act was a reaction to the escalating number of accounting and corporate scandals in the United States. Such scandals include the ones that affected Worldcom and Enron. The bill was signed into law by the then president of the United States, George Bush (Carney 48). During the enacting of the Wall Street financial reform act of 2010, the process brought political alignments mainly in the major political parties. The parties still had a large ideological separation since they had just come from an election, during which a large ideological rift had been created. By the Month of May 2010, the bill had been passed by both the senate and the house. However, there were differences in the version from the house and the one from the senate which was referred to the congressional conference committee of the United States for harmonization. The differences that were to resolved in the bills included whether the proposed consumer protection agency was to be independent as suggested by the senate or an affiliate to the Federal Reserve as proposed by the house of representatives. Another difference was whether ...Download file to see next pagesRead More