Real reform means reining in the anything-goes atmosphere that has characterized this era on Wall Street, replacing it with a comprehensive system to police the financial industry and protect the public. To provide real security for the American people this regulatory system must be truly airtight, leaving no room for leaks and loopholes that the hedge funds, derivatives traders and others are already trying to carve out. Congress must ensure that what comes out of the legislative process is not just window dressing.
We are pleased that the President recognizes that real reform also means putting in place a watchdog to ensure that ordinary Americans have the same level of security when they sign on the dotted line for products like home mortgages and credit cards that they rightly expect when buying anything from a toy to a toaster oven.
As the legislative process moves forward, we hope to strengthen and build on the President’s proposal. We will work toward more meaningful reform of credit rating agencies. We will also be fighting for stronger measures than the Administration has put forth to help keep struggling families from losing their homes. Without more effective strategies to keep people in their homes, our nation will continue to face the catastrophe of millions of mortgage foreclosures. We are pleased that the President’s plan calls for the new watchdog agency to work with the Department of Justice to enforce the nation’s civil rights statutes. However, any regulatory reform proposal must include broader measures to further fair housing and ensure that under-served markets will not continue to be incubators for predatory behavior that can ultimately imperil wider markets.
The Administration’s proposal vests the Federal Reserve with many new powers aimed at controlling system-wide risk. To that proposal, Congress must add strong measures to ensure the Federal Reserve is truly independent and responsive to the public. We must open up and democratize the Federal Reserve so that it is publicly accountable. President Obama has taken an important first step toward restoring integrity and fairness to our financial system, but the battle for reform has only just begun, and we have no illusions about the difficulty of the fight to come. Our principles will only prevail if the voices of the public are heard over those of bankers, traders, mortgage brokers and their armies of lobbyists.
Americans for Financial Reform is a 200-plus member coalition dedicated to reforming the financial system and rebuilding our economy.