Himes Helps Craft and Pass Legislation to Rein in Wall Street, Protect Consumers
WASHINGTON, DC –Congressman Jim Himes (CT-4) today helped pass legislation to end taxpayer bailouts of big banks, protect consumers and investors, and increase transparency in the American financial system. The Wall Street Reform and Consumer Protection Act addresses the root causes of the economic crisis, which cost 8 million jobs and $17 trillion in savings, to help ensure we never again face the near collapse of the national economy.
“Families in Connecticut and across the country lost their homes, their jobs, and their retirement savings as a result of the financial crisis,” said Himes. “We learned the hard way that what happens on Wall Street affects everyone’s economic livelihood, and this legislation will restore our financial security and faith in the system.”
The Wall Street Reform and Consumer Protection Act will end the concept of “too big to fail” so that taxpayers will never again be asked to bailout irresponsible private companies. The bill creates a process to shut down large, failing firms whose collapse would put the entire economy at risk. This program will operate much like the Federal Deposit Insurance Corporation, the organization that manages the seamless restructuring and sale of failing local banks.
“Lax regulation allowed big firms to make risky bets and offer loans to people who couldn’t pay them back,” said Himes. “These reforms will put rules in place to monitor and clamp down on risky behavior that could endanger our financial system.”
For too long, huge markets in complex securities such as derivatives were dangerously opaque and unregulated. This legislation will finally drag into the light of day these risky markets. In its prime, this market was six to ten times the size of the stock market. Himes worked hard to ensure that Wall Street Reform would hold derivatives dealers to strict standards while protecting end users like farmers and manufacturing companies that need to insure against risks such as fluctuations in the price of soy beans or foreign currency.
“Our economy thrives when everyone—from consumers and small business owners to large corporations and financial institutions—has access to the necessary information to make smart financial decisions,” said Himes. “Transparency is key to making any market work well. That means consumers need to understand their mortgages, and banks can’t be permitted to hide their riskiest activity from the people whose money they are managing or the regulators trusted with keeping our financial system safe.”
Also key to this reform is the creation of a Consumer Financial Protection Bureau, which will unite consumer protection rules under one roof. Currently, a variety of laws and the authority to enforce them are scattered throughout the regulatory structure, and no single entity determines whether products, features, or practices are unfair, deceptive, abusive, or unsustainable. The creation of the CFPB will, for the first time, establish a regulator tasked with the job of creating and enforcing one comprehensive set of rules to protect consumers. This consolidated approach will promote honest competition, protect the economy, and most importantly, provide a safety net for consumers. Moreover, this new agency will ensure that there is a quick response to emerging harmful practices, before they undermine a family’s financial stability or become a systemic risk. To ensure small businesses are able to meet these new requirements without undue burden, Congressman Himes passed an amendment to create an Ombudsperson within the CFPA.
“Wall Street Reform addresses the causes of the financial meltdown while putting in place strong protections to prevent another collapse,” said Himes. “I’m proud to have helped craft this legislation. It will protect consumers, increase transparency, control dangerous risk, and eliminate the possibility that the American taxpayer will ever again be asked to bailout irresponsible private companies.”
The bill has been endorsed by the AARP, Consumer Federation of America, Consumers Union, Council of Institutional Investors, National Fair Housing Alliance, National Restaurant Association, Public Citizen, SEIU, and US PIRG, among other organizations. The bill was publicly debated for more than 50 hours, and includes over 70 bipartisan amendments.