A look at the upsides and downsides for individual investors, advisors, and planners as reform measures wend through Washington.
Like a jigsaw puzzle, many of the loose pieces of regulatory reform for professional advisers and investors are now being put into place.
Unfortunately, the picture that's emerging does not reflect the political rhetoric.
Unregulated as a profession, financial planners have been pushing Congress for a piece of regulatory oversight, but they suffered a sharp setback earlier this week when the House Financial Services Committee relegated its plan to study and carved up financial planning piecemeal in the process.
The retail investor, in turn, will see only modest improvements in consumer protection, although there are some promising nuggets in the House reform package.
Institutional, Market Risk Reduced?
As Congress moves into high gear on a broad package of reforms, investors and advisers nonetheless should take some comfort that much of what caused the financial meltdown is being addressed in a substantive manner. New requirements that banks maintain higher levels of capital, mandates compelling them to put "skin in the game" by retaining shares of securitized mortgage packages, regulation of over-the-counter derivatives for the first time, and strengthened oversight of wayward credit rating agencies should, among other things, dampen the likelihood of a near-term relapse.
There were worries that the resurgent stock market would ease the political pressure on Congress to plug the largest gaps in financial regulation. However, while Congress has not gone as far as some reformers would have liked, the Obama reform program now seems back on track. Though lawmakers have been distracted by the protracted debate on health-care reform and controversy over a consumer protection agency, the House package on systemic risk is mostly in place and poised for a floor vote in early December.
Whether the key House and Senate chairmen, Barney Frank and Chris Dodd, can keep their pledge to have a full package on President Obama's desk by the end of the year remains questionable.
The New Consumer Financial Protection Agency
Recent passage by HFS of a bill creating the Consumer Financial Protection Agency suggests a modest improvement in consumer protection, but not the kind of grand vision suggested by the name.