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House Advances Financial Reform, Consumer Financial Protection Agency — Major Step for American Families

Submitted by on December 11, 2009 – 7:06 pm
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congressFOR IMMEDIATE RELEASE

DATE: December 11, 2009

House Advances Financial Reform, Consumer Financial Protection Agency

A Major Step for American Families

Washington, D.C. – Americans for Financial Reform released the following statement upon passage of H.R. 4173 “Wall Street Reform and Consumer Protection Act of 2009” by the House of Representatives today:

Heather Booth, Director, Americans for Financial Reform: “Today the House of Representatives took an important step forward in protecting the wallets of all Americans from unscrupulous and abusive lending and banking practices.  The Chamber of Commerce, the big banks, and the most unscrupulous bottom feeding lenders spent hundreds of millions of dollars to try to defeat any progress, but reform is moving ahead despite them.  We need to do more, but the passage of these reforms helps create a path back to jobs and economic growth, and we are appreciative of the leadership from Speaker Pelosi and Chairman Frank  in accomplishing this.  Now that this step has been taken, we look forward to continuing to work with them, and with the Senate, to make the changes needed to strengthen the financial reform package and ensure that our financial system serves main street, rather than being its master.

With the creation of the Consumer Financial Protection Agency, the House provided Americans with a watchdog against the tricks and traps of lenders and brokers. This is a tremendous win for consumers and for the economy as a whole. No longer will big banks be able to sell mortgages and loans that can destroy our homes, our neighborhoods, and the stability of our communities and our economy.  The CFPA also needs to have jurisdiction over the Community Reinvestment Act, which is vital to fighting discriminatory, deceptive, and unsustainable lending practices, as it does in the Senate proposal.

We are disappointed that Wall Street defeated a number of amendments that were essential to creating a system for regulating derivatives that would be effective in putting an end to the casino economy that was a fundamental source of the financial crisis. For too long these markets have operated in secrecy and the provisions in this bill do too little to change that. The legislation does make important strides in regulating private equity and hedge funds, but moving forward we must do more cover both funds AND their advisors, and to include venture capital in these new regulations.  We will work to shine daylight on the full range of the shadow markets as the bill moves to the Senate.

The Act gives the government strong resolution authority over failed large financial institutions– an essential step to prevent future TARP-style bailouts.  But the Act must be improved by placing that power in the hands of a systemic risk regulator that is fully public and accountable.  Americans for Financial Reform urges this power be given to an agency governed by a council of regulators, but if the Federal Reserve is given this role it must be reformed by removing the banks themselves from the governance of Federal Reserve Banks.  Going forward, we need to do more to keep institutions from becoming too big and too interconnected to fail before they threaten to bring down the whole financial system.

Despite the lessons of the financial meltdown, and the vast taxpayer funded bailout, Wall Street has continued to oppose financial reform, and to spend vast resources doing so.  The status quo has cost trillions of dollars in taxpayer funds, and in lost homes and savings, and it has cost millions of jobs. But it has meant untold billions for a very few institutions and individuals, and they are fighting to preserve it. We cannot let them get away with it.

Americans for Financial Reform will work to make sure that all Americans are heard as reforms move forward.”

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