Story Published:
Jul 15, 2010 at 9:30 PM MST
Story Updated:
Jul 16, 2010 at 2:02 PM MST
BILLINGS - The U.S. Senate gave final passage to the Financial Regulatory Reform Bill, the stiffest set of restrictions on banks and Wall Street since The Great Depression.
It's a response to the Wall Street meltdown that brought the world to the edge of economic collapse about two years ago.
President Obama said the new law will protect the consumer from taxpayer funded bailouts, but community bank leaders here in Billings say they are still unsure exactly how the reform will affect them and their customers.
In a party line vote of 60 to 39 the Financial Reform Bill made its way through the Senate and is headed to the Presidents desk. "Because of this reform, the American people will never again be asked to foot the bill for Wall Street's mistakes," President Obama said in a speech he made just after the Senate voted.
Billings economist Dr. Scott Rickard explains the purpose of the bill. "Part of what's going on right now, what they've tried to do, is find, number one, orderly ways to dispose of or allow companies that are going to fail to fail without taking down the system." Rickard said the 5,000 page bill outlines a plan to protect the consumer while putting a stop to taxpayer supported financial bailouts. "First, is this agency that will look at mortgages and how mortgages are packaged and sold and consumer credit and credit card issues."
First Interstate Bank President and CEO Lyle Knight said he doesn't understand a need for a new protection agency. "That's a head scratcher because we have a consumer protection agency already that's charged with doing now what this new one is doing. So we kind of have two big bureaucracies doing the same thing and I wish they would have just invested more in the infrastructure we already had."
Knight said it's too early to tell just how the reform will impact community banks here in Montana, "we want to see confidence restored in the economy, we want people to begin to hire and create jobs and for people to shop. If this is what it takes, then fine let's do it." He said the new reform comes at a cost; he's just not sure how much.
Knight also said he's concerned the bill left out a major component; excluding big name mortgage companies Fannie Mae and Freddie Mac. "That's where all of these mortgages reside that really were the genesis of the financial crisis when it happened back in 2007 and 2008."
And the mortgage crisis may be far from over, foreclosures are estimated to top one-million in 2010. Knight believes the government still has a long way to go. "I think there's more to come because I don't think they're going to leave Freddie and Fannie Mae out, but as of today they weren't included in those 5,000 pages."
President Obama is expected to sign the bill into law sometime next week.
Meanwhile, Montana Senators Jon Tester and Max Baucus say they voted in favor of the financial overhaul. Congressman Denny Rehberg, lone Montana Republican, voted against it saying the new bill "only creates more government."
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