Sunday, June 21, 2009

President Barack Obama’s financial reform: Will it change people?

On June 20, 2009, the U.S. President Barack Obama in his weekly radio and Internet address, said that he is going to work on restructuring the country’s financial system. In his speech President Obama said that he would make sure that government gain more oversight on the business activities of the country’s top financial institutions. President Obama also proposed to form “Consumer Financial Protection Agency” that will make sure that banks and financial institutions clear the fine points to consumers before they take any kind of loan.

The Financial Regulatory Reform:

On June 17, 2009, President Barack Obama unveiled his regulatory reform plan. The proposals are now submitted to the congress. The reform if implemented would reverse all the policies set by President Ronald Reagan in the 1980s. Here are some of the major points:

  • More authority to the Federal Reserve over major financial institutions.
  • More power to the Federal Deposit Insurance Corporation.
  • Tap into the “shadow system” of the financial institutions to stop their deceptive practices and protect consumers.
  • Creation of a watchdog agency called “Consumer Financial Protection Agency” to oversee the interest of the consumers. The agency would make sure that
  • banks and credit card companies become more clear when they sell their products to their consumers.

Opposing the reform plan:

Banking officials are saying that the reform plan will increase the rich of the government and put them in the middle of the business which is not a very good thing.

In support of the reform plan:

There are many people who are also supporting the reform plan. They supporters are saying that the new reform plan would give a boost to the banking and financial sector of the country. In the light of the recent economic crisis, people have lost their faith on banks and financial institutions. The bank officials place their interest first rather than consumers interest. In order to get more money, they even gave loans to people with poor credit record or people who does not have the capability to clear their loans and it caused a serious crisis.

At this very moment what is most necessary is confidence which the consumers do not have any confidence on rating agencies. A recent survey revealed that only 9 out every 100 people in the U.S and the U.K trust their financial institutions. What President Barack Obama is trying to restore the faith of the investors and consumers through his financial reformation.

American people should accept the reality:

My view is that it is time for the U.S. people also become conscious about their financial condition and understand their limitations. There are many people who earn small amount of money and have no job security. Yet, they took loans from bank to buy house and cars and other expensive items. This is not a very good practice. I understand that it is a dream to have your own house or car but for some people it is too much to handle and may not come true but life does not end if you do not own a house or your own car.

Related articles:

The New York Times

The Washington Post

Associated Press

Los Angeles Times

The Huffington Post

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