Americans for Financial Reform Detail How to Keep Wall Street Reform Bill Strong

**Audio of Call Available Here**

Washington, DC – As the Senate considers amendments to the Wall Street accountability bill, Americans for Financial Reform detailed which of those amendments will strengthen the bill and which are designed to gut it.

Heather Booth, Director, Americans for Financial Reform: “If anyone doubts that this is a good bill, that it will make significant changes, consider that the financial service industry is spending $1.4 million a day to stop it. And we’re working hard to strengthen it. Some of those dollars spent by the big banks can dismantle all that’s good in here without anyone really knowing they’re doing it. They’re doing it behind closed doors and in secret meetings. We refuse to let them get away with weakening the Wall Street reform bill through lobbyist loopholes as we work to ensure the big banks are accountable.”

Prof. Michael Greenberger, University of Maryland School of Law: “Derivatives . . . have everything to do with what this market has become – a betting operation without any federal regulation. The bill that is going to the Senate floor would have 90% of this market regulated. It also has a provision in it that would allow regulators to ban transactions that do not serve the public interest and cause financial instability. A lot of people believe if derivatives had been regulated, we would never have had this financial meltdown.

• “The Chamber of Commerce, joined by the National Association of Manufactures and others, is trying to widen the so-called end user exemption so that more than half of the market would be unregulated.

Heather McGhee, DC Director, Demos: “This bill takes a very strong and comprehensive approach toward bringing the shadow banks into regulation, imposing tougher prudential standards on the largest and riskiest banks and providing a resolution authority mechanism where the federal government did not have such authority over nonbanks and bank holding companies. We have the opportunity to make this bill even stronger.

• “The Merkley-Levin amendment would make the Volcker rule statutory and ban the conflict of interest such as issuing a security and then betting against it.

• “The Brown-Kaufman-Whitehouse-Casey-Sanders amendment would give America’s largest banks and nonbanks 3 years to transform themselves in to more accountable and less indebted institutions.

• “Part of what really caused this crisis is dozens of financial institutions that acted like banks but weren’t regulated like banks and many of them were bailed out with taxpayer dollars. This bill would change this, but nonbank financial companies are going to be fighting this tooth and nail.

Heather Slavkin, AFL-CIO: “Not only are we concerned about private equity because it employs millions of Americans, but they also issue trillions of dollars worth of debt that we believe can be a threat to the whole economy. We’re very concerned that as this debt comes due and companies have difficulty repaying it, we could face another meltdown when the firms default.

• “Sen. Jack Reed and Sen. Johnson and others are planning to offer an amendment that would strike the exemption for private equity and venture capital funds so that they are subject to the same requirements that apply to hedge funds in the existing legislation. This would mean that they have to provide basic information to the SEC, including information that would let regulators determine if the funds pose a risk to the financial system.”

• “Additionally, Sen. Menendez is looking to offer an amendment to extend the fiduciary duty to broker dealers and there may even be Republican support. The importance of this issue has come to light as the lawsuit around Goldman Sachs unfolds.”

Ed Mierzwinski, Consumer Program Director, U.S. PIRG: “Another driver of the financial crisis was predatory lending. Money was being made by gouging consumers with unfair loans and the regulators at the federal level weren’t doing their jobs. So the President proposed a comprehensive consumer financial protection agency to regulate all products. There’s a phalanx of industry lobbyists, led by the Chamber of Commerce and the American Bankers Association, who are trying to take away the authority of state Attorneys General to enforce consumer protection and to exempt a variety of industries from its rules, including auto dealers. There are a lot of misinformed accusations being made about the CFPB, including the notion that it’ll take on your local butcher or your local orthodontist. Under current law, an orthodontist or a butcher is regulated by the Federal Trade Commission if it makes loans. The CFPB would have no enforcement authority and no new authority over them as the President, as the Treasury Secretary and as Senator Dodd have repeatedly said.”

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