FOR IMMEDIATE RELEASE December 18, 2014 Contact: Marcus Stanley marcus@ourfinancialsecurity.org 202-466-3672 AFR STATEMENT ON FEDERAL RESERVE DELAY OF VOLCKER RULE IMPLEMENTATION Today, the Federal Reserve announced that it would delay the effective implementation of a crucial part of the Volcker Rule for
“[As] part of a $1.1 trillion compromise to continue running the government that Congress passed over the weekend, [a] crucial Dodd-Frank reform effectively was repealed. Big investment banks once again will be able to use federally insured deposits and other public protections to throw the dice on lightly regulated derivatives — private profit, public risk.. [I]n Washington, money not only talks, it writes the law.”
Marcus Stanley, policy director for Americans for Financial Reform, which advocates for tighter regulation of Wall Street, said the big winners would be three large banks — Citigroup, JPMorgan Chase and Bank of America. “These derivatives markets are very lucrative,” Stanley said in an interview Friday. “And that safety net subsidy, that deposit insurance subsidy, gives you a very large advantage. There’s a lot of money involved in this.”
“The spending is the largest ever for the sector in mid-term elections, and financial services is the largest source of campaign contributions and the second-largest spender on lobbying, according to the report from Americans for Financial Reform, a nonpartisan coalition of civil rights, consumer and other public interest groups.”
In a telephone press briefing, Senator Jeff Merkley (D-OR) and former Representative Barney Frank, co-author of the landmark 2010 financial reform law, outlined the dangers of a House spending-bill provision that would repeal an important piece of the Dodd-Frank Act. They were joined by Damon A. Silvers, director of policy and special counsel for the AFL-CIO; Nancy Zirkin, executive vice president of The Leadership Conference on Civil and Human Rights; and Lisa Donner, executive director of Americans for Financial Reform.
AFR sent a letter to members of the House urging opposition to H.R. 5403, the “Reforming CFPB Indirect Auto Financing Guidance Act.” This legislation places unnecessary restrictions on the CFPB’s oversight of auto financing practices— restrictions that do not exist for any other financial practice and are designed to chill the agency’s attempts to bring fairness and transparency to the auto lending market.
“The section of Dodd-Frank that Congress is proposing to repeal was put in place to help prevent future bailouts of too big to fail banks. It cordons off the kinds of extraordinarily risky transactions that were at the heart of the financial crisis. Including this repeal in the budget is outrageous. It’s a giveaway to a tiny handful of the biggest Wall Street banks that puts the country’s financial and economic stability at risk.”
The U.S. should follow the lead of 10 European countries that are working out the details of a planned financial transaction tax, Public Citizen, Americans for Financial Reform and Stamp Out Poverty said today. “A transaction tax can raise significant revenue, cut down on dangerous high-frequency trading, and incentivize Wall Street to serve real economic needs,” AFR’s Jim Lardner said. “It is time for the U.S. to get on board.”
This conference, co-sponsored by Americans for Financial Reform, the Economic Policy Institute and the Roosevelt Institute, featured keynote speeches by Senator Elizabeth Warren and economist and N.Y. Times columnist Paul Krugman.
“Supervision of nonbank auto financial institutions will bring much-needed attention to otherwise
lightly-regulated companies, will ensure compliance with consumer financial laws, and will
ensure that auto financing by banks, already subject to CFPB supervision, is not at a competitive
disadvantage.”