Welcome to the DAUK Economics Policy Action Network

Purposes:

Given that the global economy is experiencing one of its most severe contractions since the 1930s, it is important that DAUK provide its members with a forum to learn more about the causes of the financial crisis and the various remedies proposed by policymakers.

One of the major purposes of this PAN is to keep members apprised of key policy initiatives in at least four issue-areas (economics, finance, regulation and taxation) that will be critical to the recovery of the US economy as well as the broader global economy. Some particular policy issues that we would like to address are listed here.

Activities:

Thus far, we have produced material for this website and invite DAUK members to produce more!  With the DAUK film committee, we have set up the discussions after the screenings of Inside the Meltdown and Enron. We also organized a discussion and theatre visit to see Enron in London.  We have other ideas for activities and we would welcome additional suggestions. 

Join us by contacting the economicsteam@daukpan.org.uk. You can help shape the direction and activities of this Policy Action Network.

 Latest news and current developments on financial reform

Financial Reform Legislation

15 Democrats and 10 Republicans met  in conference to 'reconcile' the two bills on financial reform.  This resulted in the  Dodd-Frank Conference Report of the Wall Street Reform and Consumer Protection Act The goal was to have a bill passed and on President Obama's desk by July 4th, but this deadline has now passed.    This bill is now called the Dodd-Frank Wall Street Reform and Consumer Protection Act.

On December 11th, the House passed the Wall Street Reform and Consumer Protection Act (HR 4173) and on June 30th, the House passed the Dodd-Frank Conference Report of the Wall Street Reform and Consumer Protection Act by a vote of 237-192.
 
The Senate bill Restoring American Financial Stability Act of 2010 was passed on May 20 2010. The votes are very tight in the Senate - 57 ensured Democratic votes with probable support from Republican Senators Susan Collins and Scott Brown and Democrat Ben Nelson enabling the procedural hurdles to be overcome.

Summary provisions of the new legislation:

 Speaker of the House Nancy Pelosi provides the following summary on her website

Summary:

• Creating a new Consumer Financial Protection Agency to protect families and small businesses by ensuring that bank loans, mortgages, and credit cards are fair, affordable, understandable, and transparent.  We currently have rules that keep companies from selling us toasters that burn down our homes.  We should have similar rules that bar the financial industry from offering mortgage loans to people who can’t afford repayment.
• Ending predatory lending practices that occurred during the subprime lending frenzy.
• Shutting down “too big to fail” financial firms before risky and irresponsible behavior threatens to bring down the entire economy.
• Ending costly taxpayer bailouts with new procedures to unwind failing companies that pose the greatest risk – paid for by the financial industry and not the taxpayers.  Also eliminates the TARP as of July 1.
• Tough new rules on the riskiest financial practices that gambled with your money and caused the financial crash, like the credit default swaps that devastated AIG, and common sense regulation of derivatives and other complex financial products.  Includes a strong “Volcker rule” that generally restricts large financial firms with commercial banking operations from trading in speculative investments.
• Tough enforcement and oversight with:
  • More enforcement power and funding for the Securities and Exchange Commission, including requiring registration of hedge funds and private equity funds
  • Enhanced oversight and transparency for credit rating agencies, whose seal of approval gave way to excessively risky practices that led to a financial collapse
• Reining in egregious executive compensation and retirement plans by allowing a ‘say on pay’ for shareholders, requiring independent directors on compensation committees, and limiting bank executive risky pay practices that jeopardize banks’ safety and soundness.
• New protections for grocers, retailers and other small businesses facing out-of-control swipe fees that banks and other credit and debit card issuers charge these businesses for debit or prepaid-card purchases.  As a result, merchants stand to save billions.
• Audits the Federal Reserve's emergency lending programs from the financial crisis and limits the Fed's emergency lending authority.

Follow the work of the US Financial Crisis Inquiry Commission

Forums -  Day 1  and Day 2 -  were held on the Causes of the Financial Crisis covering  a range of issues  including - for example - 'too big to fail,'  derivatives, financial literacy.

Hearings and Testimony on particular topics

• Credit Rating: Credibility of Credit Ratings, the Investment Decisions Made on those ratings, and the Financial Crisis
• Subprime Lending - Day 1 Day 2 Day 3 - Subprime Lending and Securitizationand Government-Sponsored Enterprises
• The Shadow Banking System and  Investment Banks

Other Information resources:

Pew Financial Reform Project was 'formed in response to the financial crisis [and] brings a non-partisan, fact-based to reforming and modernizing the financial sector."

"Give us a huddle" in the Economist on May27 2010 has a useful chart outlining the main differences between the House and Senate Bills.

 The Economic Crisis and Key Policy Debates

For essential background and an incisive analysis read this well-documented paper on The Background to the Economic Crisis and Key Policy Debates produced by Dr Deirdre Shay Kamlani for this PAN.

In addition, there are further resources in the sections listed below.

Current Legislation and Regulation 

Recommended Reading

See the presentation by Deirdre Kamlani at the Screening and Discussion of Inside the Meltdown on June 26 here (link forthcoming!) 

Disclaimer: The information provided here  is intended for educational use and offered as a public service. Any views expressed should not be understood as representing or reflecting  the views of Democrats Abroad UK, Democrats Abroad  or the Democratic Party of the United States. Links to other organizations or publications imply neither endorsement of their policies nor any association with the Democratic Party or Democrats Abroad - UK.

By Dr Deirdre Shay Kamlani June 2009, updated July 12 2010 by Elaine Capizzi