Legislation Will End Government Bailout and Prevent “Too Big to Fail” Institutions
WASHINGTION, D.C. Today Congresswoman Lois Capps voted for historic legislation to better protect consumers and taxpayers by strengthening our financial regulatory system. The Wall Street Reform and Consumer Protection Act (H.R. 4173) takes important steps to prevent another financial crisis like the one the U.S. experienced last fall that brought about the worst recession in more than a generation. It ends taxpayer-funded bailouts for ‘too big to fail’ financial institutions while protecting consumers from predatory lending, safeguarding retirement and college savings from needless risks, and providing much needed transparency and accountability into the financial system.
“I am pleased we are taking important steps to better protect consumers and to modernize and strengthen our financial regulatory system,” said Capps. “Last fall we all witnessed the gaping holes in our financial regulatory system which brought about the most serious economic crisis this country has faced since the Great Depression. Unfortunately, the irresponsibility of Wall Street firms and large banks, combined with lax regulatory enforcement, created a financial collapse that cost taxpayer billions and spread economic pain to everyday American families and businesses. This legislation fixes fundamental problems in financial oversight that allowed this most recent crisis to happen and provides consumers and taxpayers protection from future calamities.”
The legislation will create a new Consumer Financial Protection Agency to protect families and small businesses by ensuring bank loans, mortgages, and credit cards are fair, affordable, and understandable. For the first time, the new agency streamlines into one place the role of protecting ordinary Americans’ financial security.
“The Consumer Financial Protection Agency is a critical aspect of fixing what is broken in our current financial regulatory system,” noted Capps. “This will provide consumers with peace-of-mind as they conduct their financial business by protecting them from dubious products and practices by banks and credit card companies.”
The Wall Street Reform and Consumer Protection Act also addresses the threat of “too big to fail” financial firms, dealing with one of the main causes of the last financial crisis. It also strengthens government oversight over large banks and financial firms – including new regulation of credit rating agencies and riskier hedge funds, derivatives, and other complex financial deals. The bill also includes tougher enforcement and oversight of existing protections. It gives the Securities and Exchange Commission new enforcement powers, including requiring hedge funds and private equity funds to register. It enhances oversight and transparency of the credit rating agencies whose seal of approval gave way to many of the excessively risky practices that led to a financial collapse. It addresses egregious executive compensation by allowing shareholders to have a say on compensation, requiring independent directors to sit on compensation committees, and limiting the risky pay practices of bank executives that jeopardized banks’ soundness.
“Ending business as usual on Wall Street and protecting consumers are critical steps in our effort to rebuild confidence in our economy and create jobs,” said Capps. “Enacting these common-sense reforms to will prevent irresponsible behavior by Wall Street and big banks from harming hard-working families and small businesses.
Summary of Legislation’s Provisions:
- Protect families and small businesses by ensuring that bank loans, mortgages, and credit cards are fair, affordable, understandable, and transparent by creating a new Consumer Financial Protection Agency.
- End predatory lending practices that occurred during the subprime lending frenzy.
- End “too big to fail” financial firms before risky and irresponsible behavior threatens to bring down the entire economy.
- Prevent costly taxpayer bailouts with new procedures to unwind failing companies that pose the greatest risk – paid for by the financial industry and not the taxpayers.
- Tough new rules on the riskiest financial practices that gambled with investor money and caused the financial crash, like the credit default swaps that devastated AIG, and common sense regulation of derivatives and other complex financial products offered to consumers.
- Tougher enforcement and oversight with:
- More enforcement power and funding for the Securities and Exchange Commission, including requiring registration of hedge funds and private equity funds
- Enhanced oversight and transparency for credit rating agencies, whose seal of approval gave way to excessively risky practices that led to a financial collapse
- Address egregious executive compensation, allowing a ‘say on pay’ for shareholders, requiring independent directors on compensation committees, and limiting bank executive risky pay practices that jeopardize banks’ safety and soundness.
Transcript of Congresswoman Capps' speech on the Wall Street Reform and Consumer Protection Act:
Madame Speaker, I rise today in strong support of the Wall Street Reform and Consumer Protection Act.
This historic legislation will strengthen our financial regulatory system and better protect consumers from abuse by the lending and credit industries. Most importantly, this historic legislation ends “Too Big to Fail” and government bailouts.
Never again will taxpayer dollars be used to bailout Wall Street and their over-paid executives. Large financial institutions like AIG or Lehman Brothers at risk of collapse will be dissolved in an orderly and controlled process. And this process will be paid for by the shareholders, creditors and assets of the failed companies, not the taxpayers.
For years Wall Street has reaped the spoils of success with no penalties for failure. This bill will end this injustice, and force Wall Street to accept responsibility for its failings.
I urge my colleagues to support this bill. I yield back.
