Many Wall Street banks and firms have argued against the Financial Reform Bill. Image from Flickr.

Late this week or early next week, a Financial Reform Bill summary is due to be debated in the Senate. To get a good idea of the Financial Reform Bill summary that will regulate everything from a payday lender to the biggest banks, it is possible to put together a financial reform bill summary of both HR 4173, the House bill that was passed last December and S 3271, the Senate bill that will debated this week. Keep in mind that this Financial Reform Bill summary could change during reconciliation, though the broad strokes will likely remain the same. This article covers HR 4173, the House Bill. For a full Financial Reform Bill summary of the Senate bill, see Part 2.

Financial Reform Bill Summary | HR 4173

HR 4173 is the House of Representatives Financial Reform Bill. This financial reform bill originated in the House Financial Services Committee and is generally known as the Wall Street Reform and Consumer Protection Act. A full text of HR 4173 is available in PDF form on the U.S. House of representatives website.

Financial Reform Bill HR 4173 summary | Consumer Protections

First, a Consumer Financial Protection Agency is set to be a separate Federal agency focused solely on decoding, regulating, and ensuring the safety of U.S. financial product consumers. The day-to-day functionality of the Consumer Financial Protection Agency might include creating disclosure standards, working for consumer education about personal loan companies, and examining the details of new financial products.

Anti-predatory lending laws and mortgage reform would also be included. A standard that borrowers must be able to repay the loans they are sold would be instituted. The role of credit rating agencies would also be addressed, and credit rating agencies would be given some liability for their ratings.

HR 4173 Financial Reform Bill summary | Stability and Investing

The Financial Stability Council would be an “inter agency council” charged with identifying what financial firms are especially risky. The Securities and Exchange Commission would also be given stronger investor-protection powers.

Financial Reform Bill HR 4173 Summary | Too Big To Fail

Firms that are considered “Too Big To Fail” would no longer be given taxpayer dollars to keep running. Instead, the Financial Reform Bill would create a system for dismantling financial businesses when they start to fail. In short – no more bailouts for big companies.

Summary of HR 4173 | Investors Say on Pay

HR 4173 would give shareholders of a company a “say on pay” of the executives of a company. While the vote would only be advisory, regulators are also given the ability to ban “inappropriate or imprudently risky” pay packages. In other words, no more executives getting paid millions for running their companies into the ground.

HR 4173 Summary | Derivatives

The “derivatives” market would be regulated for the first time ever. A financial derivative is a product developed from another product. For example, the “mortgage-backed securities” were a financial product derived from residential mortgages. Any “derivative” product with “substantial risk” would be monitored.

Financial reform bill summary | Private Pools Investing Money

Hedge funds and private equity firms – the businesses who are in the business of investing with private money – are not currently regulated. Under HR 4173, a “private pool of capital” – a group of people that pool their money to invest it – would be examined for risk by the Financial Stability Council.

Financial reform bill HR 4173 | Office of Insurance

Finally, the Financial Reform Bill HR 4173 would create a unified insurance regulatory agency. Rather than insurance companies being subject to multiple sets of rules, a single Office of Insurance would monitor, regulate, and report on the insurance industry.

This is a summary of the Financial Reform Bill that passed the House of Representatives as HR 4173. See a full summary of Senate bill S 3271 in S 3271 | Financial Reform Bill Summary Part 2

Sources:

Reuters
Daily Finance
OpenCongress.org
Wall St Journal

Gas prices are still a long way from the all-time highs of 2008, but they’re inching up again. Will rising gas prices thwart the economic recovery? CNNMoney asked that question of Mark Zandi, chief economist for Moody’s Economy.com. Zandi believes that the average nationwide price for a gallon of gas may exceed $3 by Memorial Day; but before you run out to a payday loan store to finance your next fill-up, note that Zandi also believes the increase is not likely to “undermine the recovery.”

Will spending decrease?

The more people have to pay for gas, of course, the less they can spend on other things. According to the CNN article, however, several experts think that this time around, consumers will keep driving and keep spending despite the rising cost of gas. Zandi, for one, expects gas prices to drop back down this coming fall, and that’s why he thinks the current trend won’t reverse recent economic gains. Zandi admits, on the other hand, that we could be headed for trouble if gas prices don’t fall as he expects and $3 per gallon becomes the new norm.

The same old story of supply and demand

Gas prices reached $4.11 in the summer of 2008 partly because of a speculative frenzy, but have remained at less than $3 a gallon since October of that year. In that recent escalation, people actually changed their driving behaviors as a result of gas prices. Not only did they drive fewer miles, they stopped buying SUVs and other gas-guzzlers and started buying smaller cars.

As a result, demand for oil and gas began to decrease, and when Lehman Brothers imploded, gas prices took a rapid dive, dipping to $1.62 per gallon in late December 2008.  As the economy began to turn around and consumer-spending increased, gas prices began to rise steadily.

The rising price of gas may be a favorable sign

As the weather warms up, as workers find jobs, and as people drive more, the demand for gas increases, and prices go up. For those reasons, Zandi believes that the latest round of price hikes may not be a bad thing. The increase may simply mean that the economy is making a turn for the better.

AAA club spokesman Troy Green points out that many oil refineries shut down in March for maintenance, which results in a temporary decrease in supply and an accompanying increase in price. Also, grades of gasoline vary with the season and summer blends contain more clean-burning additives which make gas more expensive. Although there may be logical explanations for the increasing cost of gasoline, it remains to be seen whether personal loan companies will be increasingly called upon to help finance fill-ups at the pumps.

Most Top 10 lists go end with the “best” of what the list is about, but I am going to start with the best idea I’ve heard for how to save money for a wedding: recycling aluminum. A friend of mine is doing just that through a project she calls Wedding Cans. It might sound odd, but a month into her project, it’s international news. Check out the Wedding Cans journal for a full report on the media madness.

2. Corporate sponsorship

This is another sort of strange idea that I came across on Wise Bread. Sure, it could be seen as “selling out” and turning something that some people consider “sacred” into a commercial, but who are we kidding here? Weddings, like Christmas, have become ultimately focused on material elements. If you agree to have corporate logos or feature products at your wedding, you can avoid having to pay back personal loan companies.

3. Take a dare

One pretty bizarre idea that I saw on Romance Fire is to “take a video of yourself conquering a known fear if the price is right.” Yes, in the grand tradition of “Fear Factor” and “Jackass,” one groom suggests you harness the power of mortification.

4. Use your registry

Worst-Case Scenarios suggests that instead of registering for gifts that you will use after the wedding, register for ceremony components such as a limousine service, floral arrangements, food and beverages.

5. Sell stuff

Of course, there are numerous tip lists out there that suggest you sell your stuff, either online, at a yard sale or some other way. Maybe you could hold an auction.

6. Just ask

Another very popular idea out there is that you should start a web site or a group on a social network and simply ask for people to donate to your wedding.

7. Have everybody pitch in

Similar to the registry idea, which has people helping pay for the wedding instead of just buying gifts, you can ask certain people, close friends and family members, to pay for one thing. For instance, someone could pay for the cake, another person could fund wedding favors. You can pick everything yourself and just ask a certain person to fund it as a gift.

8. Vacation home instead of wedding hall

This doesn’t raise money, it saves money, but it’s a really good idea, so I’m including it anyway. Wedding reception halls can cost thousands of dollars per hour to rent. Check for nearby vacation home rentals and hold the reception in a beautiful house or yard. You can rent these places for days and still spend less than a few hours at a hall.

9. A little help from your friends

This raising money for a wedding idea isn’t directed at the bride and groom, but rather at the wedding party and the couple’s friends. A common custom in some places is to hold a “Jack and Jill,” which is a big party in honor of the bride and groom, and charge $5 or so to get in. Then, the money is given to the couple.

10. Planning ahead

Pretty much every site I’ve gone to suggests that you plan ahead and save money in advance. They also suggest that you could get a second job or offer some sort of service and save the money you make. To that I say, “duh,” but because it is the most common piece of advice out there, I figured I had to include it.

Zhu Zhu pets are like this guy, but they aren't alive. However, many thousands of kids don't care. (Photo: flickr.com)

Retail stores are getting ready for the Christmas shopping season, which means that people who aren’t compulsively early shoppers are getting ready to buy their gifts. If that means getting in touch with personal loan companies to bankroll the whole operation, so be it. What a person decides to do with their money is their own business.

If you’re wondering what the little ones on your Christmas list might be interested in this year, Zhu Zhu Pets appear to be a safe course. According to Toys R Us, that’s going to be the top toy of the 2009 holiday shopping season. For retailers in need of a good holiday season, Zhu Zhu will do for them, too.

Play Me Off, Mr. Squiggles

Don’t let that cat anywhere near Mr. Squiggles and his Zhu Zhu Pets brethren this holiday season. The kids want to keep these toys to themselves. Effectively, they’re pets without the waste products, food needs and tendency to eat homework. For little kids, I don’t see the harm, although older children would be well-served shouldering the responsibility of caring for real hamsters.

Zhu Zhu Pets Getting Hard to Find?

Zhu Zhu Pets like Mr. Squiggles are selling on Amazon for $25.95, but there are reports that Wal-Mart was selling them for as little as $8. Understandably, they’re flying off the shelves at that price. Leave it to Wal-Mart to make toy shopping an operation that doesn’t require personal loan companies.

OK, So What Does Zhu Zhu Do For You?

While it doesn’t teach you about animal husbandry, Zhu Zhu Pets do come with the prerequisite array of bells and whistles. They are programmed to make more than 40 different sound effects and display rudimentary artificial intelligence. You can either watch them zip about the house or place them in one of their accessory play sets (sold separately, of course). Most of the pre-programmed sound effects only come out when Mr. Squiggles or another of the Zhu Zhu Pets is on a play set. They you can hear both kitchen and (wait for it) bathroom noises. Poopless, kiddies – but with the flush.

Retailers Don’t Want to Be Circling the Bowl

This Christmas, there’s a greater focus on consumer value than in recent years. We have the recession to thank for that. Cautious spending tends to rule out huge purchases, so retailers are looking for at smaller hits like Zhu Zhu Pets rather than big toys that have to be cut in price before the public gives them a nibble. Market research firm NPD Group Inc. informed the Columbus Dispatch that last year’s holiday season was marked by a five percent drop in toy sales over the previous year. Needham & Co. sees a further decrease from 2008 to 2009.

I Just Want to Say Good Luck. Mr. Squiggles is Counting on You

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Surely the Zhu Zhu Pets aren’t a serious replacement for real animals, but parents will appreciate not having to clean up after the animatronic replacements. We live busy lives and don’t want to have to contact personal loan companies in order to afford the cavalcade of cleansers needed to make our homes look presentable.

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George Clooney had the right idea when he dated a waitress. That could just be the way to end poverty.

A few days ago, as I was reading about one very wealthy person getting engaged to another very wealthy person, I came up with a solution to poverty. Unfortunately, it is a solution that only works mathematically, not realistically.

My idea is this: if rich people married poor people, the distribution of wealth would all even out. Of course, I am not saying that this should be mandated in any way, but it seems logical, doesn’t it. Unfortunately, it is not logical at all. But a girl can dream.

Running in different circles

Now, I must clarify that I am not advocating people should marry only for money, or for lack thereof. People should always marry for love. I am just saying that if the different “classes” of people intermingled a little more, there wouldn’t be so much poverty. If only people could turn to their significant others instead of personal loan companies, debt could be a thing of the past.

For instance, if Oprah were to magically fall in love with a homeless man, that would be one fewer person in the “poverty” category. Also, instead of growing her fortune by combing it with another rich person’s, Oprah would remain super wealthy and not become super-uber-mega wealthy.

Of course, real estate prices ensure that people of a certain income level are surrounded by their own kind. That’s the reason my grand scheme will never work. But there are other reasons, too.

Social stigma

In general, rich people and poor people tend to have different ideals. Rich people are often rich because they are willing to work at it. Some of them see poor people as lazy. Of course, these are pretty old-fashioned stereotypes.

Some people want to keep their incomes moderate to avoid becoming materialistic and the corruption they believe comes along with power. Some rich people simply don’t want to spend their money on supporting people who don’t make their own money. But, I think I have a solution to this.

Idea for online dating sites

Listen up, all of you entrepreneurs out there. I can see a cross-section out there of groups of people who might be interested in meeting each other. How about trust fund babies and lazy poor people? Match up the people who didn’t work for their money with people who just don’t want to work.

Then, of course, the inverse of that idea would be to match up people who worked hard for their money with hard workers who just couldn’t catch a break.

The tough thing about making this idea work is figuring out how to market it and orchestrate it so that you’d end up with the best results. But that’s for you to figure out. If you use my idea, though, you’d better give me a cut of your profits.