GO
Loading...

Financial Reform Bill 'Toothless': Analyst

The ground-breaking financial reform bill agreed by U.S. lawmakers last week is "toothless," according to Mizuho Securities analyst Jim Antos.

"Some of the most popular measures have been watered down," Antos told CNBC on Monday. "For instance, on the issue of inflated executive pay, shareholders will have the right to vote every 2-3 years, but this will be non-binding on management."

Antos also noted that the contentious Lincoln provision on derivatives trading - that in its most severe form would have required banks to spin off this lucrative business - was also scaled back in the bill to require banks to spin off just their riskiest derivative operations into affiliates.

"So, consequently, it's toothless," he concluded.

Antos believed the bill was a political compromise ahead of the G20 meeting in Toronto at the weekend.

"The Obama administration wanted to get the bill passed in time for the G20 meetings in Toronto so that Washington can influence other countries to adopt similar restrictions on financial companies," he noted.

Lawmakers from the U.S. Senate and House of Representatives were to have made a final vote on the bill this week - a process that may now be held up after Democratic Senator Robert Byrd was hospitalized for a serious illness. There has been hope the bill would make it to President Barack Obama's desk by July 4th to be signed into law.

Whichever way it turns out, Antos says this is just "the first wave of tougher regulations and we will see more in the next couple of years," and expects some of the measures "to be adopted in one form or other by regulators in Asia."

Featured

Banks