Finance Reform Bill Does Not Address Root Cause of Financial Meltdown

The Senate's passage of the financial reform bill today does not address root causes of the financial meltdown, it has the wrong focus and it was very partisan, says a Senate legal advisor who investigated Wall Street securities practices and how they contributed to the financial meltdown.  “The legislation is long on rhetoric but short on real results. It talks around the issue, but unfortunately, we're likely to be back to the same thing in eight or 10 years. For instance, it doesn't address synthetic derivatives, which are pure gambling. The legislation also doesn't address issues of accountability and liability.  In order for this to be true reform, it has to address the root cause of the crisis – which was human nature.  Without addressing liability, you can't do that.” Liability was initially considered, but then rejected from the final language of the bill, by Senators on both sides of the aisle beholden to Wall Street interests, says Gary M. Brown, who has been assisting the United States Senate's Permanent Subcommittee on Investigations (PSI) in its investigation of the causes and consequences of the recent financial crisis.  In that role, he also advised on portions of the Financial Reform Bill as it related to various proposed amendments to the federal securities laws. 
Although PSI continues to be a very bi-partisan investigative body, Mr. Brown found the partisanship in the full Senate more pronounced than previous instances in which he has advised on pending legislation.  He said that with that type of environment, “You don’t get the best bill you can get.”
He was asked by PSI Chairman Senator Carl Levin (D-Michigan) to provide Subcommittee members and staff with legal advice and analysis regarding securities laws and regulations in support of the investigation.  He also assisted in briefing Senators and staff in preparation for PSI's hearings relative to Washington Mutual and Goldman Sachs.  Mr. Brown, a shareholder with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, is available immediately to provide analysis and discuss his unique perspective of the Financial Reform Bill, and can discuss the political process of how this piece of legislation came together, and why certain points were or were not included, how partisanship played a role, and what should have been included in the bill to make it more effective.

[07/15/2010]