AFR sent the following letter to Congress regarding H.R. 4173 on December 9, 2009.
The undersigned organizations strongly urge you to support H.R. 4173, the “Wall Street Reform and Consumer Protection Act of 2009,” when it comes to the House floor this week. We write individually and also on behalf of Americans for Financial Reform, a coalition of more than 200 national, state and local consumer, labor, business, retiree, investor, community, and civil rights organizations who are campaigning for real reform in our nation’s financial system.
The need for this legislation could not be more obvious. Years of deregulation have produced a financial system that is a threat to our economy. Rampant abuses in consumer lending practices, combined with a casino mentality on Wall Street and the willful blindness of federal regulators, have plunged our economy into its worst economic crisis since the Great Depression – and it is clear that Wall Street has not learned its lessons. While H.R. 4173 needs to be strengthened in important areas, it contains vital reforms for our country and must be passed.
When H.R. 4173 comes to the floor this week, a number of amendments are expected to be offered. In order to ensure the most meaningful reforms, we urge you to:
- OPPOSE the Minnick amendment to eliminate a new Consumer Financial Protection Agency (CFPA) from the bill. It would leave enforcement of consumer protection and civil rights laws in the hands of the same existing regulatory bodies that resoundingly failed to use them.
- OPPOSE the Bean et al. amendment on state preemption. It would prevent state attorneys general from enforcing the law or state legislatures from enacting new laws that apply to national banks or their subsidiaries. Federal law should be a floor, not a ceiling, of protection.
- SUPPORT the Hinchey amendment on derivatives so that states and individuals are not precluded from enforcing their rights under the law.
- SUPPORT the Stupak/DeLauro/Larson/Van Hollen amendment on derivatives. Regulators must have the authority to ban abusive derivatives instruments rather than simply reporting them to Congress, and transactions which violate the law should be considered invalid.
At the same time, we believe that H.R. 4173 must be improved in important respects:
- The bill provides systemic regulatory authority to the Board of Governors of the Federal Reserve without reforming the Federal Reserve System to remove the banks themselves from a role in overseeing the Federal Reserve’s regulatory staff. We need a fully public systemic risk regulator, either in the form of a separate agency as detailed in Chairman Dodd’s proposal or a reformed Federal Reserve.
- The proposed CFPA needs to have jurisdiction over the Community Reinvestment Act (CRA). Contrary to the remarkably uninformed smear campaign that has been waged against it by a handful of media pundits, the CRA is vital to fighting discriminatory, deceptive, and unsustainable lending practices in minority communities. But as is the case with other consumer protection and civil rights laws, CRA enforcement in recent years has been extremely weak, allowing a wide range of under-regulated, non-bank – and often predatory – lenders to fill the void. As such, we favor the approach taken by the President Obama and Chairman Dodd’s proposals with respect to the CRA.
- We would also support an amendment that gives the SEC authority to make the exemption from registration under the 1940 Act for private investment funds contingent upon such funds fulfilling requirements established by the SEC.
Despite the need for these improvements, H.R. 4173 would represent dramatic progress. By voting for it, you will send a very strong signal to the American public that you intend to change the way that Wall Street works for the better.
Thank you for your consideration of our views. If you have any questions, please contact Rob Randhava, Leadership Conference on Civil Rights, (202) 466-6058 and Lisa Donner, Americans for Financial Reform, (202) 263-4544.
Americans for Financial Reform