On Wednesday, June 17, President Obama announced his administration's sweeping, important, and positive changes to the ways in which financial markets are regulated. Along with Americans for Financial Reform, a
200-plus member coalition dedicated to reforming the financial system
and rebuilding our economy, Woodstock Institute has offered several recommendations.
We are pleased that the President recognizes that real reform also means putting in place a watchdog to ensure that ordinary Americans have the same level of security when they sign on the dotted line for products like home mortgages and credit cards that they rightly expect when buying anything from a toy to a toaster oven. The establishment of such a watchdog is also a major efforts to strengthen the Community Reinvestment Act, and bolsters the chances for passage of the Community Modernization Reinvestment Act of 2009 .
As the legislative process moves forward, we hope to strengthen and build on the President’s proposal. We will work toward more meaningful reform of credit rating agencies. We will also be fighting for stronger measures than the Administration has put forth to help keep struggling families from losing their homes. Without more effective strategies to keep people in their homes, our nation will continue to face the catastrophe of millions of mortgage foreclosures. We are pleased that the President’s plan calls for the new watchdog agency to work with the Department of Justice to enforce the nation’s civil rights statutes. However, any regulatory reform proposal must include broader measures to further fair housing and ensure that under-served markets will not continue to be incubators for predatory behavior that can ultimately imperil wider markets.
The Administration’s proposal vests the Federal Reserve with many new powers aimed at controlling system-wide risk. To that proposal, Congress must add strong measures to ensure the Federal Reserve is truly independent and responsive to the public. We must open up and democratize the Federal Reserve so that it is publicly accountable.
President Obama has taken an important first step toward restoring integrity and fairness to our financial system, but the battle for reform has only just begun, and we have no illusions about the difficulty community reinvestment and consumer organizations will face durnig the passage of these reforms.