One Step Closer to Financial Reform?

The global financial credit crisis was an epochal moment for those who have wanted to change practices within financial services. The Obama administration has made reform within the banking industry one its main goals and the passing of an extensive regulation measure in the House last Friday has drawn praise from the President. If the measure is made into a bill, a new agency would be created to protect consumers, regulate the over-the counter market for derivatives, prevent the likelihood that one bank’s failure could bring down the entire economy, and include terms for executive pay. However, this legislation has a long way to go before becoming a bill and made into law. Senate will not form its own version of the legislation until next year and not one Republican representative voted for the measure, which indicates the level of support the legislation will have from the GOP in the upper house. Though the measure is being led by the Democrats, with Barney Frank R-Mass at the forefront, 26 Democrats decided to vote against it. Many Republican representatives argued that legislation would contribute to unemployment and over extend the government powers. While the Democrats were able to pass the legislation without any Republican support or all of its party members, they will have a more difficult time in the Senate where a two-thirds majority requires bipartisan cooperation.

The difficulty and length of passing financial regulation reform, despite the undisputed need for change in the industry, speaks to the nature of American politics. Reconciling interests between parties and within party members can have detrimental effects on rate at which bills are made in to laws and can give a tremendous amount of power to individual legislators willing to vote against their party.