It's all about taking care of your friends. According to the New York Post Chris Dodd's financial reform bill is filled with special-interest loopholes and exclusions.
But the section of the bill most littered with exemptions is probably the proposed consumer-protection bureau. In some instances, these exclusions actually roll back existing consumer protections.
Remember the mortgage crisis? Well, the primary consumer-protection law for homebuyers is the 1974 Real Estate Settlement Procedures Act. The law requires the timely, accurate disclosure of relevant closing costs and prohibits "kickbacks" for the steering of settlement services.
For example, your real-estate agent cannot, under RESPA, be paid a fee for steering you toward a certain home inspector, title company or other closing service. Yet, under the Dodd bill, real-estate agents would be exempted from RESPA. If that weren't bad enough, the Dodd bill exempts insurers and attorneys -- both now subject to RESPA -- from its consumer protections, too.
Although Dodd's bill is advertised to impose greater federal supervision over "too big to fail" institutions, It should come as no surprise that insurance companies are exempt. Hartford, Connecticut used to be known as the Insurance Capitol of the World, hence the favored treatment. According to the Post, the new and improved oversight will apply only to bank-holding companies, while insurance companies, which tend to have thrift charters rather than bank charters will be exempt.
So, as the bill stands now, AIG and other insurers that accepted massive bailout funds, such as The Hartford, would not be automatically covered. That's a head-scratcher only if you forget that most insurance companies reside in Dodd's home state, Connecticut.
Business as usual – under a Democratic regime.
Chris Dodd re-writing our financial regulations is like John Gotti re-writing the Rico statutes.
Posted by: Bram | April 28, 2010 at 10:26 AM