An assortment of items from the inbox on the passage of financial regulatory reform:
Good afternoon, everybody. With today’s vote in the Senate, the United States Congress has now passed a Wall Street reform bill that will bring greater economic security to families and businesses across the country.
It was clear from the moment it began that this recession was not the result of your typical economic downturn. It was the result of recklessness and irresponsibility in certain corners of Wall Street that infected the entire economy –- irresponsibility that cost millions of Americans their jobs, and millions more their hard-earned savings. It’s why businesses cannot get credit and why families haven’t been able to see appreciation in their home values -- in fact, the values of their homes have plummeted.
Even before the financial crisis that led to this recession, I spoke on Wall Street about the need for common-sense reforms to protect consumers and our economy as a whole. But the crisis came, and only underscored the need for the kind of reform the Senate passed today -- reform that will protect consumers when they take out a mortgage or sign up for a credit card; reform that will prevent the kind of shadowy deals that led to this crisis; reform that would never again put taxpayers on the hook for Wall Street’s mistakes.
The reform that Congress passed today will accomplish these goals. It is a bill that was made possible first and foremost by the tireless efforts of Chairman Chris Dodd and Congressman and Chairman Barney Frank, as well as the leadership of Harry Reid and Nancy Pelosi. I am extraordinarily grateful for their determination in the face of a massive lobbying effort from the financial industry, and I’m also grateful for all of the members of Congress who stood on the side of reform -- including three Republican senators who put politics and partisanship aside today to vote for this bill.
The financial industry is central to our nation’s ability to grow, to prosper, to compete and to innovate. This reform will foster that innovation, not hamper it. It’s designed to make sure that everyone follows the same set of rules, so that firms compete on price and quality, not on tricks and traps. It demands accountability and responsibility from everybody. It provides certainty to everyone from bankers to farmers to business owners to consumers. And unless your business model depends on cutting corners or bilking your customers, you have nothing to fear from this reform.
For all those Americans who are wondering what Wall Street reform means for you, here’s what you should expect. If you’ve ever applied for a credit card, a student loan, a mortgage, you know the feeling of signing your name to pages of barely understandable fine print. It’s a big step for most families, and one that’s often filled with unnecessary confusion and apprehension. As a result, many Americans are simply duped into hidden fees and loans they just can’t afford by companies who know exactly what they’re doing.
Those days will soon end. From now on, every American will be empowered with the clear and concise information you need to make financial decisions that are best for you. This bill will crack down on abusive practices and unscrupulous mortgage lenders. It will reinforce the new credit card law we passed banning unfair rate hikes, and ensure that folks aren’t unwittingly caught by overdraft fees when they sign up for a checking account. It will give students who take out college loans clear information and make sure lenders don’t cheat the system. And it will ensure that every American receives a free credit score if they are denied a loan or insurance because of that score. All told, this reform puts in place the strongest consumer financial protections in history, and it creates a new consumer watchdog to enforce those protections.
Because of this reform, the American people will never again be asked to foot the bill for Wall Street’s mistakes. There will be no more taxpayer-funded bailouts -- period. If a large financial institution should ever fail, this reform gives us the ability to wind it down without endangering the broader economy. And there will be new rules to end the perception that any firm is “too big to fail,” so that we don’t have another Lehman Brothers or AIG.
Because of reform, the kind of complex, backroom deals that helped trigger this financial crisis will finally be brought into the light of day. And from now on, shareholders and other executives can know that shareholders will have greater say on the pay of CEOs, so that they can reward success instead of failure, and help change the perverse incentives that encouraged so much reckless risk-taking in the past.
In short, Wall Street reform will bring greater security to folks on Main Street -- to families who are looking to buy their first home or send their kids to college; to taxpayers who shouldn’t have to pay for somebody else’s mistakes or irresponsibility; to small businesses, community banks and credit unions who play by the rules; to shareholders and investors who want to see their companies grow and thrive.
Now, already, the Republican leader in the House has called for repeal of this reform. I would suggest that America can’t afford to go backwards, and I think that’s how most Americans feel as well. We can’t afford another financial crisis just as we’re digging out from the last one.
I said when I took office we can’t simply rebuild this economy on the same pile of sand -- on maxed-out credit cards, houses used like ATM machines, or overleveraged firms on Wall Street. We need to rebuild on a firmer, stronger foundation for economic growth. That’s why we invested in renewable energy that’s currently creating new jobs all across America. That’s why we’re reforming our education system so that our workers can compete in the global economy. That’s why we passed health reform that will lower costs for families and businesses. And that’s why I’m about to sign Wall Street reform into law -- to protect consumers and lay the foundation for a stronger and safer financial system -- one that is innovative, creative, competitive, and far less prone to panic and collapse. Along with the steps we’re taking to spur innovation, encourage hiring and rein in our deficits, this is how we’re ultimately going to build an economy that is stronger and more prosperous than it was before, and one that provides opportunity for all Americans.
Thanks very much.
Rep. Patrick Murphy:
Yesterday, Congress sent to the President’s desk the most significant reforms to Wall Street since the Great Depression. Patrick Murphy proudly voted for the Wall Street Reform and Consumer Protection Act, which reins in Big Banks and their outrageous bonuses, puts an end to taxpayer-funded bailouts, and protects and empowers consumers to make the best decisions on homes, credit cards, and their own financial future.
“American families have been put through the wringer,” Murphy said. “Years without accountability for Wall Street cost us 8 million jobs. Families have seen their 401(k)s and college savings accounts devastated. As we rebuild our economy, we must put in place commonsense rules to ensure that Big Banks can never again play Russian Roulette with our futures.”
While in office, Congressman Fitzpatrick served on the Financial Services Committee – the very committee expected to regulate and oversee the financial industry. Yet he turned a blind eye while Big Banks gambled recklessly with Americans' savings and drove the economy into a ditch. He failed Bucks County families, preferring instead to do the bidding of the Wall Street buddies who bankrolled his last campaign.
Under Congressman Fitzpatrick’s watch, Wall Street ran wild. The Securities and Exchange Commission was gutted, deprived of the resources needed to investigate abuses on Wall Street. And American middle class families were left holding the bag. Even now his Republican leadership is calling for repeal of these vital protections that have been put in place to ensure that a meltdown like this doesn’t happen again.
Rep. Joe Sestak:
U.S. Senate candidate Joe Sestak today praised the Senate's passage of the Financial Regulatory Reform bill, which will put in place critical reforms to protect consumers and small businesses across Pennsylvania. This is an important step that will help our nation avoid more reckless practices like the ones that led to the current financial meltdown.
"This has been a once-in-a-generation showdown between the American people and the most powerful institutions in the country: big banks, high-paid corporate lobbying firms, and Wall Street," said Joe. "It is a victory for working families over powerful Wall Street special interests. This bill puts in place critical reforms to protect consumers and small businesses across Pennsylvania."
The current financial crisis was created by the escalating greed and recklessness that permeated Wall Street in recent years. As a result of that recklessness, the average American household has lost $100,000 in wealth, eight million Americans have lost their jobs, and trillions of dollars in hardworking Americans' savings have disappeared. This bill provides the strongest defense yet against a similar crisis, yet Congressman Toomey remains steadfast against this bill to the peril of millions of working families still recovering.
"Its unfortunate that Congressman Toomey and his colleagues would rather stand with Wall Street over working families," said Joe. "His opposition to these commonsense reforms underscores his allegiance to Wall Street's powerful interests and the same risky practices that led to our current economic debacle."
Congressman Toomey helped write the bill that repealed the Glass-Steagal Act, helping to usher in the era of too-big-to-fail banks that came crashing down in 2008. As president of the Wall Street special interest group Club for Growth, he defended the billions in taxpayer-funded bonuses paid out by AIG yet he voted against bonuses for our troops while he was in Congress. And despite the painful job losses and weak business environment caused by the Wall Street recession, he still stubbornly sticks to his failed ideology of deregulation above all else.
The new financial reform bill, which Congressman Toomey opposes, will protect taxpayers by:
* Ending taxpayer-funded bailouts and preventing the rise of "too-big-too-fail" banks and financial institutions;
* Creating a Financial Stability Oversight Council to identify and regulate existing large firms that could threaten the entire financial system upon their collapse;
* Regulating -- for the first time ever -- the "over-the-counter" derivatives marketplace;
* Directing the Comptroller General of the U.S. to perform an audit of all actions taken by the Federal Reserve during the current economic crisis; and
* Creating a Federal Insurance Office that will monitor all aspects of the insurance industry.
It will also improve consumer protection by:
* Creating a Consumer Financial Protection Bureau: a new, independent department within the Federal Reserve devoted to protecting Americans from unfair and abusive financial products and services;
* Cracking down on predatory lending by forcing institutions to ensure that borrowers can repay the loans they are sold and outlawing many of the egregious lending practices that marked the subprime mortgage boom; and
* Imposing limits on the debit-card transaction fees that credit card companies charge merchants and retailers for using the system, the cost savings of which should benefit consumers.
And it will further protect investors by:
* Strengthening the SEC's enforcement powers so that it can better regulate the nation's securities markets with substantially increased investigative capabilities;
* Reforming credit rating agencies to address the role they played in the economic crisis; and
* Giving shareholders a say on pay for executives, and enabling regulators to ban inappropriate or risky compensation practices, while requiring financial firms to disclose compensation structures that include incentive-based elements.
Rep. Paul Kanjorski:
Today, Congressman Paul E. Kanjorski (PA-11), Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, applauded the Senate’s passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Chairman Kanjorski participated as one of the few negotiators to resolve the differences between the original House and Senate versions of this legislation. The Senate approved the final agreement on this historic bill by a vote of 60-39, clearing the bill for the President’s signature.
“Today, I am very pleased that the Senate followed the House in voting in favor of passing and implementing the most sweeping financial regulatory reforms since the Great Depression,” said Chairman Kanjorski. “This is an enormous achievement for the American people. I, and many other Members of Congress, have been working on this legislation for over two years now. Now is the time for action to rein in Wall Street. This bill ensures that American families and small businesses will be better protected in the future from the wizards of Wall Street, and it takes strong steps to protect our economy from Wall Street’s casino culture.”
Chairman Kanjorski added, “The Kanjorski amendment, which aims to end the era of ‘too big to fail’ and prevent future bailouts, is one of the strongest provisions to hold Wall Street back from harming our economy in the future. MIT Economics Professor Simon Johnson has called the Kanjorski amendment a powerful tool for reining in Wall Street. Many Wall Street lobbyists have also viewed the Kanjorski amendment as one of the biggest threats to their profitability. We fought back and won. By passing the Kanjorski amendment, Congress has sided with the American people, not Wall Street’s titans. We will no longer allow financial firms to become so big, interconnected, concentrated, or risky that their failure could threaten the stability of the American economy or rock the credit of small businesses and Americans’ retirement nest eggs.”
“During the past two years, too many Americans have faced serious financial problems as a result of the economic crisis,” concluded Chairman Kanjorski. “In sum, this bill contains sweeping authority to help avoid future taxpayer-funded bailouts, prevent financial companies from threatening the stability of our economy, and protect the American public from once again experiencing such tremendous financial turmoil. I am therefore heartened that the Senate followed the House in passing this thoughtful, transparent, comprehensive, and sweeping financial reform package. We will all be better off because of this legislation. I look forward to watching the President sign it into law.”
Click here to view an op-ed published yesterday by Simon Johnson, a professor at the MIT Sloan School of Management and former chief economist of the International Monetary Fund. The op-ed explains how the Kanjorski amendment relates to anti-trust laws where the power of firms can be constrained.
Click here to view an article from the New York Times which states that former Treasury Secretary Henry M. Paulson, Jr., believes that the creation of the systemic risk council is “perhaps the most important aspect of the bill and crucial to preventing the next crisis.” The article explains that the council has “the power to shut firms down or change practices that might put the system at risk,” referring to the Kanjorski amendment.
In addition to shepherding the Kanjorski “too big to fail” amendment through the legislative process, Chairman Kanjorski played a pivotal role in drafting many of the bill’s reforms, including provisions to better protect investors and enhance the powers of securities regulators, register and regulate hedge fund managers, reform the operations and regulation of credit rating agencies, create a Federal office focused on insurance matters, improve mortgage servicing and appraisal rules, and create a national program based on Pennsylvania’s successful experiences in providing bridge loans to help temporarily unemployed workers keep their homes.
Rep. Allyson Schwartz (from June 30th):
U.S. Rep. Allyson Schwartz voted in support of legislation today to provide stronger consumer protections for American families and small businesses and prevent the types of abuses that led to the economic crisis. The Wall Street Reform and Consumer Protection Act includes common sense reforms to protect consumers from predatory lending abuses and misleading tactics, and ensures strong supervision and regulation of the business practices of our financial institutions.
“Working families in Pennsylvania have lost their homes, their jobs and their retirement savings as a result of the financial collapse,” Schwartz said. “This legislation helps move our country back on stable ground – protecting family’s retirement funds, homes and college savings and securing business’s financial futures. With this bill, we are empowering consumers and ensuring taxpayers are never again on the hook for Wall Street’s mistakes.”
Years without accountability and oversight of Wall Street and big banks under President Bush and Congressional Republicans led to the worst economic collapse since the Great Depression—and American families and small businesses paid the price. We lost eight million jobs and $17 trillion in retirement savings and Americans’ net worth.
The Wall Street Reform and Consumer Protection Act will:
* Rein in egregious executive compensation and retirement plans;
* Put an end to taxpayer funded bailouts and the idea of too big to fail;
* Create a consumer financial protection agency to protect families and small businesses by ensuring that bank loans, mortgages and credit cards are fair, affordable, understandable and transparent;
* Bring transparency and accountability to our financial system;
* End abusive predatory lending practices;
* Create new protections for grocers, retailers and other small businesses