Very soon our president will sign into law the Financial Overhaul Bill of 2010. This 390,000 word document was created from the ashes of the 2008 banking collapse that brought the worlds financial systems to its knees. The bill, being released from the Senate next week, will be the heaviest piece of legislation ever created and the most sweeping reform bill since the great depression. Though the repercussions of the bill will not be felt for years, it stands to protect consumers from predatory lending, sets up systems to more heavily scrutinize financial institutions and generally make banking a more transparent operation.
This is not the first time the banking system has failed though. The Savings and Loan crisis of late 1980's was the first major event to call into question where banking executives bread was being buttered. Systems become corrupt when individuals that are being compensated by volume incentives are told to "ethically police" the system. Any organization managed only by its internal components is doomed to fail. Leaving the Rooster in the hen pen will not always make more chickens.
In my opinion the reform bill is a very good thing. Being an ex-mortgage banker myself and experiencing first-hand the rise and fall of the financial industry, banks need more scrutiny for their own good. Consumers will be the residual beneficiaries of the bill, but so will the global banking system. Initially, as in 1991 when the S & L Reform Bill came into law, there will be complaints, increased fees and substantially greater processing times, but over time the global banking system will be in better synchronicity. This is one step in the right direction.