Wednesday, April 28, 2010

Chris Dodd's carve-outs for cronies

The White House is almost giddy that the Republicans are blocking debate on the Dodd financial reform bill because the action plays into the narrative that the GOP is the party of obstructionism.  However, as Americans learn more and more about what is actually in the bill, Democrats may find that the label they have worked so hard to stick on the super-minority is an asset, not a liability.

Mark A. Calabria writes for the New York Post (via Big Government):
The financial-regulatory bill now before the Senate is so filled with special-interest loopholes and exclusions that it makes the health-care "reform" bill, with its "Cornhusker Kickback" and "Louisiana Purchase," look like a model of rectitude.

The Senate bill, sponsored by Democrat Chris Dodd, claims to subject all "too big to fail" institutions to greater federal supervision, but in fact it only mandates such regulation for bank-holding companies. Regulators would have to make a case-by-case decision on whether to apply it to other financial companies.

That's no minor oversight, because insurance companies, like AIG, tend to have thrift charters rather than bank charters. So, as the bill stands now, AIG and other insurers that accepted massive bailout funds, such as The Hartford, would not be automatically covered. That's a head-scratcher only if you forget that most insurance companies reside in Dodd's home state, Connecticut.

But the section of the bill most littered with exemptions is probably the proposed consumer-protection bureau. In some instances, these exclusions actually roll back existing consumer protections.

Remember the mortgage crisis? Well, the primary consumer-protection law for homebuyers is the 1974 Real Estate Settlement Procedures Act. The law requires the timely, accurate disclosure of relevant closing costs and prohibits "kickbacks" for the steering of settlement services.

For example, your real-estate agent cannot, under RESPA, be paid a fee for steering you toward a certain home inspector, title company or other closing service. Yet, under the Dodd bill, real-estate agents would be exempted from RESPA. If that weren't bad enough, the Dodd bill exempts insurers and attorneys -- both now subject to RESPA -- from its consumer protections, too.
The drafters of this 1136-pager do not make it easy for the uninitiated to discern that it actually rolls back consumer protections.  But sure enough, if you look on page 903 the bill expressly excludes real estate agents from the authority of the CFPA, and on page 1098 it effectively transfers the powers of the Secretary of HUD under RESPA to the CFPA.

Read the rest of Mr. Calabria's article here.

James Gattuso at the Heritage Foundation has identified 14 fatal flaws in the Dodd financial reform bill.

Capitol Confidential at Big Government explains why "Obama-Dodd Financial Reform Helps Wall Street, Hurts Everyone Else."

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