WASHINGTON — President Obama yesterday signed into law financial regulatory reform legislation that will make sweeping changes in the municipal and other markets, saying it will prevent a reoccurrence of the “breakdown” that caused the current “severe recession.”
But Obama warned that the new law “doesn’t mean our work is over.”
“For these new rules to be effective, regulators will have to be vigilant,” he told those attending the ceremony. “We also may need to make adjustments along the way as our financial system adapts to these new changes.”
Though the legislation cleared the Senate last week on a mostly partisan basis, with just three Republicans voting for it, Obama claimed it would benefit both Wall Street and Main Street by increasing accountability and transparency and providing more certainty to market participants. “This reform will help foster innovation, not hamper it,” he said.
But American Bankers Association officials said they were “disappointed” with the new law because it “contains a tsunami of new rules and restrictions for traditional banks that had nothing to do with causing the financial crisis in the first place.”
And the U.S. Chamber of Commerce warned the law will “create uncertainty, not jobs.”
“Such a broad, sweeping bill epitomizes a law with unintended consequences that creates more uncertainty for American businesses,” said Thomas J. Donohue, its president and chief executive officer.
The new law, among other things, would require the Municipal Securities Rulemaking Board to change the composition of its board so that a majority of its members are representatives of the public. It would require non-dealer advisers in the municipal market, including swap advisers and guaranteed investment contract brokers, to register with the Securities and Exchange Commission and the MSRB and comply with their rules. Advisers would have a fiduciary duty to put the interests of their clients over their own. In addition, the MSRB would be able to assist the SEC and FINRA in the enforcement of its rules and share in the fees they collect for such activities.
