Financial Overhaul is Law, Now Comes Battle Over its Rules

7/24/2010

The law, named after its principal authors, Connecticut Senator Christopher Dodd and Massachusetts Representative Barney Frank, gives the government new authority to unwind failing financial firms that may threaten the entire system, imposes new rules on derivatives markets and creates a consumer-protection agency at the Federal Reserve to monitor everything from home loans to credit cards. The Treasury Department and other officials now begin writing the regulations that will give the framework for enforcing the law, a process that may take a year.

Federal Reserve Chairman Ben Bernanke told Congress Wednesday the economic outlook remains "unusually uncertain," and the central bank is ready to take new steps to keep the recovery alive if the economy worsens. Testifying before the Senate Banking Committee, Bernanke also said record low interest rates are still needed to bolster the economy. He repeated a pledge to keep them there for an "extended period." Bernanke downplayed the odds that the economy will slide back into a "double-dip" recession. But he acknowledged the economy is fragile.

Increased housing commitments swelled U.S. taxpayers' total support for the financial system by $700 billion in the past year to around $3.7 trillion, a government watchdog said on Wednesday. The Special Inspector General for the Troubled Asset Relief Program said the increase was due largely to the government's pledges to supply capital to Fannie Mae and Freddie Mac and to guarantee more mortgages to the support the housing market.

Housing starts fell in June to the lowest level in eight months after the expiration of a U.S. government tax incentive caused sales to slump. The retreat following the end of government support shows it will be difficult for the industry that precipitated the recession to sustain a recovery. Mounting foreclosures will swell the supply of houses on the market and pressure prices, while prospective buyers shy away as a lack of jobs shakes confidence in the world’s largest economy.

Stack of Stuff:

The Emotions of Risk

Jobless Claims Still Heading Wrong Way

A Mid-Year Bull vs. Bear Investing Smackdown

Bernanke Open to New Steps to Keep Recovery Going

US financial system support up $700 billion in past year

U.S. Housing Starts Drop to Lowest Level Since October

Financial Overhaul is Law, Now Comes Battle Over its Rules

Pimco Sells Black Swan Protection as Wall Street Markets Fear

Japanese Stimulus Spending History: Kind of Like Crack Cocaine

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