President Obama

In a speech before signing the law, Obama said, “These reforms represent the strongest consumer financial protections in history… and because of the law there would be no more taxpayer funded bailout.”

The new law is regarded as the most significant reform of the nation’s financial system since the late 1930s. Last week, the U.S. Senate with a 60-30 vote passed the reform, which some call the Chris Dodd Bill because Democratic Senator Christopher Dodd of Connecticut was significantly involved in drafting the bill. Dodd also had strong support in the U.S. House from Democratic Representative Barney Frank of Massachusetts. President Obama made special tribute to both Dodd and Frank for their work on the bill in his speech. He also paid special tribute to the three Republican Senators, Olympia Snowe and Susan Collins of Maine, and Scott Brown of Massachusetts, who joined 57 Democratic senators in voting for the bill.

It took approximately a year of aggressive negotiations and debate since the bill was first introduced by Senator Dodd before it was approved by the Senate.

The objective of the new law is to strengthen the protection afforded to consumers in contracting financial instruments like mortgages, credit cards, student loans and in making certain kind of investments. One of the law’s more significant innovations is that it includes the creation and implementation of a consumer protection agency (the Consumer Financial Protection Bureau) to protect the rights of consumers from unfair practices in relation to financial transactions with banks and other financial institutions.

The law also creates a new council of regulators, led by the Treasury, that has the authority to establish the limits of cash banks must keep on hand, to prevent them from ever triggering another financial crisis, as well as set the procedures for shutting down large financial institutions that are in danger of collapse.

To prevent irresponsible speculation by Wall Street firms, the law will limit such speculations, as well as the ability of these firms to own hedge funds.

Now that the law has been signed, the government’s financial regulators can begin enforcing the various forms and stages of financial regulation. The chief of the Consumer Financial Protection Bureau is expected to be appointed by President Obama within the next few weeks.

In referring to the new consumer protection agency, Obama said the agency will have “Just one job, looking out for the people – not big banks, not lenders, not investment houses – as they interact with the financial system.”

The president also said the new financial regulatory law “will finally bring transparency to the kinds of complex and risky transactions that helped trigger the (2008) financial crisis. Shareholders will also have a greater say on the pay of CEOs and other executives, so they can reward success instead of failure.”

A Nova University American history graduate, commenting on the signing of the new financial regulatory law said, “It’s amazing that the accomplishments of President Obama are not more widely heralded in the country. In 18 months since he has been president he has succeeded, among other achievements, in having Congress pass two key-note legislation (healthcare and financial reform) that no president has achieved since President Franklyn Roosevelt some 70 years ago.”