FINANCIAL REG BILL NEARS FINAL VERSION

After more than 20 hours of overnight negotiations, Senate Democrats reached a compromise set of rules that will more tightly regulate banks and financial markets as well as transactions such as derivatives. The bill is over 2000 pages long and it will take some time for its full implications to be known and adjusted to. The effects will last for years and some of the regulations will be draconian and far-reaching even for the average person. Look for credit to be tightened by banks. Investors in real estate will find it harder to find mortgage money. Financial businesses will find it harder to operate their business. Ordinary business hedging will become harder to do. For example, a farmer may find it harder to sell corn futures to protect from a drop in price for his corn crop. Larger banks will have to divest most of their proprietary trading departments, especially derivative trading, because of the new regulations. This new law will create a new and giant government agency that is not really needed. We already have the Federal Reserve Board, the Securities and Exchange Commission, and the Federal Deposit Insurance Corporation. Between them they should be able to handle enforcement.