FOR IMMEDIATE RELEASE CONTACT: Lauren Weiner, 202-470-5870
DATE: July 8, 2010
Rep. Peter King Uses False Statements and
Fear To Defend Vote In Favor Of Big Banks
In Mail to Constituents Rep. King Misrepresents
Basic Facts to Defend Vote
Washington, DC – In defense of his vote against Wall Street reform last week, Congressman Peter King (R-NY) resorted to false statements and fear mongering in a letter to his constituents.
Americans for Financial Reform received the letter from King’s office after writing to the Congressman to object to his opposition to significant Wall Street reforms that will protect consumers and taxpayers from a recurrence of the economic meltdown that cost Americans 8 million jobs.
Last week, the House took an historic vote to rein in the Big Banks, protect consumers and reform reckless Wall Street practices. In that vote, Congressman King stood with Wall Street and other opponents of reform.
“Congressman King seems to be trying to defend the indefensible – a vote to protect Wall Street recklessness over meaningful protections for consumers and taxpayers,” said Heather Booth, the head of Americans for Financial Reform. “No wonder he has to resort to false facts, debunked rhetoric and fear. This letter is nothing short of complete misrepresentation of what is actually in the bill.”
A full copy of the letter is below but here are the lowlights of King’s misrepresentations of the bill:
What King Says: It proposes restrictions on proprietary trading which are unique to the United States. This will put us at a competitive disadvantage with European countries and runs the real risk of driving U.S. capital and jobs overseas.
The Truth: Prior to deregulation, our largest depository banks operated under many of these rules during one of the fastest growing, most stable economic periods of our nation’s history. In fact, money and markets tend to go where there is the greatest stability and predictability. These rules protect taxpayers and the larger economy against the kind of upheaval that happens when Wall Street banks gamble knowing they will be backed up by taxpayer bailouts. Propriety trading and private fund speculation also creates conflicts-of-interest with banks’ customers and diverts bank capital away from lending to America’s small businesses and families. The reforms opposed by Rep. King and the Wall Street banks provide critical protections that will lead to greater economic security for all Americans.
What King Says: It uses $11 billion of unused TARP money to cover the cost of the legislation even though the President promised that all unused TARP funds would be used to pay down the deficit.
The Truth: An alternative funding source which would have required the banks to pay for cleaning up their own mess was part of the original bill. Rep. King, the Wall Street banks and other reform opponents vigorously opposed and successfully blocked requiring the banks to directly pay for the clean up. TARP was originally meant to help us get through this crisis and so it is appropriate to use these funds for this purpose.
What King Says: It creates a Consumer Financial Protection Bureau (CFPB) which gives the federal government excessive control over our economy and the private sector, going far beyond consumer protections.
The Truth: The bill creates a Consumer Financial Protection Bureau to rein in the practices that contributed to the collapse of the housing market like predatory mortgage lending. It also will oversee credit and lending products like credit cards, overdraft loans and payday loans. Reining in unfair, deceptive, and abusive financial products and services does not provide the federal government excessive control over our economy. Rather, it gives consumers control over how they spend their money and provides them with the ability to ensure that they are getting the best deal for their money.
What King Says: It totally ignores Fannie Mae and Freddie Mac which I believe are at the root of the financial crisis.
The Truth: Fannie Mae and Freddie Mac were not blameless but, according to independent economists and experts the genesis of the crisis was the shadow banking system driven by Wall Street-funded mortgage originators incentivized not to offer sustainable mortgage products to homeowners but to deliver new mortgages back to Wall Street and the push for earning higher fees for higher interest rates. Because of Wall Street and the big banks’ irresponsible lending and securitization practices, the government now backs 97% of Americans’ home loans, principally through Fannie and Freddie.
What King Says: It sets such high capital requirements that it could jeopardize more than $40 billion in available bank capital in New York alone.
The Truth: It does not ‘jeopardize’ anything. In fact, capital requirements provide some basic level of insurance against bad bets. If these limits were in place prior to the crash, New York banks and those in the rest of the country would have been better able to respond to the crisis and would have more cash available now. Dangerously low capital reserves at banks and investment firms allowed these companies to be immensely profitable in the boom years (since they could gamble based on money they did not actually have). However, when the crisis hit, they were caught holding as little as $1 of capital for every $50 in debt exposure. Trillions in household wealth and millions of jobs were lost because of this type of recklessness.
What King Says: This 2,300 page bill was rushed to a vote within days of being written without anyone having a chance to read it. This will inevitably lead to unintended consequences.
The Truth: The problems that brought down our economy were complex, and complex problems often require complex solutions. The length of a piece of legislation is not an indicator of whether its provisions are needed. This bill has been under consideration for over a year, so it was hardly rushed to a vote. President Obama first presented his financial reform plan in June of 2009, the House of Representatives passed financial reform in December of 2009 and the Senate passed it in May 2010.
The full letter from King:
July 7, 2010
Dear Ms. XXXX-
Thank you for contacting me regarding financial regulatory reform. While I agree with you that regulatory reform is necessary, the Dodd-Frank Act (H.R. 4173) is unacceptable, which is why I voted against it.
While H.R. 4173 makes some attempt at consumer protection and transparency, it overreaches in some areas, while failing to address other vital areas.
· It totally ignores Fannie Mae and Freddie Mac which I believe are at the root of the financial crisis.
· It proposes restrictions on proprietary trading which are unique to the United States. This will put us at a competitive disadvantage with European countries and runs the real risk of driving U.S. capital and jobs overseas.
· It uses $11 billion of unused TARP money to cover the cost of the legislation even though the President promised that all unused TARP funds would be uses to pay down the deficit.
· It creates a Consumer Financial Protections Bureau (CFPB) which gives the federal government excessive control over our economy and the private sector, going far beyond consumer protections.
· It sets such high capital requirements that it could jeopardize more than $40 billion in available bank capital in New York alone.
FOR IMMEDIATE RELEASE
CONTACT: Lauren Weiner
DATE: July 8, 2010
In Mail to Constituents Rep. King Misrepresents Basic Facts to Defend Vote
Washington, DC – In defense of his vote against Wall Street reform last week, Congressman Peter King (R-NY) resorted to false statements and fear mongering in a letter to his constituents.
Americans for Financial Reform received the letter from King’s office after writing to the Congressman to object to his opposition to significant Wall Street reforms that will protect consumers and taxpayers from a recurrence of the economic meltdown that cost Americans 8 million jobs.
Last week, the House took an historic vote to rein in the Big Banks, protect consumers and reform reckless Wall Street practices. In that vote, Congressman King stood with Wall Street and other opponents of reform.
“Congressman King seems to be trying to defend the indefensible – a vote to protect Wall Street recklessness over meaningful protections for consumers and taxpayers,” said Heather Booth, the head of Americans for Financial Reform. “No wonder he has to resort to false facts, debunked rhetoric and fear. This letter is nothing short of complete misrepresentation of what is actually in the bill.”
A full copy of the letter is below but here are the lowlights of King’s misrepresentations of the bill:
What King Says: It proposes restrictions on proprietary trading which are unique to the United States. This will put us at a competitive disadvantage with European countries and runs the real risk of driving U.S. capital and jobs overseas.
The Truth: Prior to deregulation, our largest depository banks operated under many of these rules during one of the fastest growing, most stable economic periods of our nation’s history. In fact, money and markets tend to go where there is the greatest stability and predictability. These rules protect taxpayers and the larger economy against the kind of upheaval that happens when Wall Street banks gamble knowing they will be backed up by taxpayer bailouts. Propriety trading and private fund speculation also creates conflicts-of-interest with banks’ customers and diverts bank capital away from lending to America’s small businesses and families. The reforms opposed by Rep. King and the Wall Street banks provide critical protections that will lead to greater economic security for all Americans.
What King Says: It uses $11 billion of unused TARP money to cover the cost of the legislation even though the President promised that all unused TARP funds would be used to pay down the deficit.
The Truth: An alternative funding source which would have required the banks to pay for cleaning up their own mess was part of the original bill. Rep. King, the Wall Street banks and other reform opponents vigorously opposed and successfully blocked requiring the banks to directly pay for the clean up. TARP was originally meant to help us get through this crisis and so it is appropriate to use these funds for this purpose.
What King Says: It creates a Consumer Financial Protection Bureau (CFPB) which gives the federal government excessive control over our economy and the private sector, going far beyond consumer protections.
The Truth: The bill creates a Consumer Financial Protection Bureau to rein in the practices that contributed to the collapse of the housing market like predatory mortgage lending. It also will oversee credit and lending products like credit cards, overdraft loans and payday loans. Reining in unfair, deceptive, and abusive financial products and services does not provide the federal government excessive control over our economy. Rather, it gives consumers control over how they spend their money and provides them with the ability to ensure that they are getting the best deal for their money.
What King Says: It totally ignores Fannie Mae and Freddie Mac which I believe are at the root of the financial crisis.
The Truth: Fannie Mae and Freddie Mac were not blameless but, according to independent economists and experts the genesis of the crisis was the shadow banking system driven by Wall Street-funded mortgage originators incentivized not to offer sustainable mortgage products to homeowners but to deliver new mortgages back to Wall Street and the push for earning higher fees for higher interest rates. Because of Wall Street and the big banks’ irresponsible lending and securitization practices, the government now backs 97% of Americans’ home loans, principally through Fannie and Freddie.
What King Says: It sets such high capital requirements that it could jeopardize more than $40 billion in available bank capital in New York alone.
The Truth: It does not ‘jeopardize’ anything. In fact, capital requirements provide some basic level of insurance against bad bets. If these limits were in place prior to the crash, New York banks and those in the rest of the country would have been better able to respond to the crisis and would have more cash available now. Dangerously low capital reserves at banks and investment firms allowed these companies to be immensely profitable in the boom years (since they could gamble based on money they did not actually have). However, when the crisis hit, they were caught holding as little as $1 of capital for every $50 in debt exposure. Trillions in household wealth and millions of jobs were lost because of this type of recklessness.
What King Says: This 2,300 page bill was rushed to a vote within days of being written without anyone having a chance to read it. This will inevitably lead to unintended consequences.
The Truth: The problems that brought down our economy were complex, and complex problems often require complex solutions. The length of a piece of legislation is not an indicator of whether its provisions are needed. This bill has been under consideration for over a year, so it was hardly rushed to a vote. President Obama first presented his financial reform plan in June of 2009, the House of Representatives passed financial reform in December of 2009 and the Senate passed it in May 2010.
The full letter from King:
July 7, 2010
Dear Ms. XXXX-
Thank you for contacting me regarding financial regulatory reform. While I agree with you that regulatory reform is necessary, the Dodd-Frank Act (H.R. 4173) is unacceptable, which is why I voted against it.
While H.R. 4173 makes some attempt at consumer protection and transparency, it overreaches in some areas, while failing to address other vital areas.
· It totally ignores Fannie Mae and Freddie Mac which I believe are at the root of the financial crisis.
· It proposes restrictions on proprietary trading which are unique to the United States. This will put us at a competitive disadvantage with European countries and runs the real risk of driving U.S. capital and jobs overseas.
· It uses $11 billion of unused TARP money to cover the cost of the legislation even though the President promised that all unused TARP funds would be uses to pay down the deficit.
· It creates a Consumer Financial Protections Bureau (CFPB) which gives the federal government excessive control over our economy and the private sector, going far beyond consumer protections.
· It sets such high capital requirements that it could jeopardize more than $40 billion in available bank capital in New York alone.
· This 2,300 page bill was rushed to a vote within days of being written without anyone having a chance to read it. This will inevitably lead to unintended consequences.
New York and Long Island are the center of the financial world and hundreds of thousands of jobs throughout our region and the country depend upon the success of the financial services industry. I regret that H.R. 4173 does more harm than good which is why I was compelled to vote against it. I certainly do, however, appreciate your thoughts and welcome your continued input.
Sincerely,
PETER T. KING
Member of Congress