Statement On Wall Street Reform Conference Report
Statement of Senator Patrick Leahy
Wall Street Reform Conference Report
July 15, 2010
Mr. President, I strongly support the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
Real Reform, Despite Enormous Special Interest Pressures
The American people often are cynical, with good reason, about the success that powerful corporate interests have in trumping the interests and rights of everyday Americans, on Wall Street, in Congress and even on our Supreme Court. Backed by multi-millions of dollars that ordinary Americans cannot match, the lobbying pressure that was sharply focused on trying to shape this bill at every step, including the conference, was almost without parallel. Yet the bill that emerged from conference truly reflects the Nation’s interests in real Wall Street reform. This is a great, unheralded victory for the American people, and one that should serve as an example again and again.
Practical Checks On Rampant Wall Street Excess
The recent financial crisis clearly exposed several flaws in our current regulatory system. Many large Wall Street investment banks and insurance companies hid their shaky finances from stockholders and government regulators. Corporate executives saw their salaries rise to extreme heights, even as their companies were failing and seeking government assistance. Through it all, federal regulatory agencies failed to provide the necessary oversight to rein in these reckless actions. If this crisis has taught us anything, it is that the look-the-other way, hands-off deregulatory policies that were in vogue in recent times can jeopardize not only private investments, but our entire economy.
The conference report we are voting on today goes directly to the heart of the Wall Street excesses that brought our economy to the brink. For far too long Wall Street firms made risky bets in the dark and reaped enormous profits. Then, when their bets went sour, they turned to America’s taxpayers to bail them out. This bill is about changing the culture of rampant Wall Street speculation and doing what needs to be done to get our economy back on track. We need more transparency and oversight of Wall Street. These improvements will increase transparency in and oversight of the financial sector. These historic reforms will set clear standards and real enforcement – including jail time for executives – to finally curb the fraud, manipulation and riotous speculation that punctured confidence in our markets and derailed our economy.
I commend Chairman Barney Frank and Chairman Chris Dodd for their excellent leadership of the conference. As a conferee, I know full well the pressure that powerful Wall Street special interests put on all members to water down the bill, and I appreciate the difficulty the two chairmen have endured corralling the votes needed for final passage. Despite heavy and expensive lobbying from those who support the status quo, the conference committee put together a strong and balanced bill that will clean up Wall Street abuses, build confidence in our economy, and continue our progress toward economic recovery.
This bill makes several significant improvements to our financial services regulations. Specifically, it will create a new systemic regulatory council to watch for broad economic bubbles and red flags; end taxpayer bailouts of Wall Street institutions by establishing a new resolution authority to wind down failing mega-firms outside of bankruptcy; create a new consumer financial protection bureau to oversee financial products on the market and reign in subprime lending; set new capital and leverage limits for financial institutions; give the SEC and CFTC new authorities and resources to protect investors; bring the massive derivatives market under federal regulation for the first time; require hedge fund and other private investment advisers to register with the SEC; establish reasonable and fair swipe fees for debit and credit cards; and provide new resources for unemployed homeowners who are having trouble making their mortgage payments.
As chairman of the Senate Judiciary Committee, I am particularly pleased that the conference report also includes provisions I authored, working with Senator Grassley, Senator Specter and Senator Kaufman, to ensure law enforcement and federal agencies have the necessary tools to investigate and prosecute financial crimes and to protect whistleblowers who help uncover these crimes. I’m pleased that the conference report preserves meaningful antitrust oversight in the financial industry. I also am heartened that the conference agreement includes provisions I put forward to introduce true transparency into the complex operations of large financial institutions and the federal agencies that regulate them. It has seemed to me that promoting transparency should be a vital element of Wall Street reform. Transparency is a cleansing agent for healthy markets. Open information helps investors make sound decisions. When information is murky, market decisions must be based on guesses or rumors that corrode trust and that encourage fraud and deception.
Another major step forward is the derivatives section of the conference report, crafted by the Agriculture Committee on which I serve. I applaud our Committee chair, Senator Blanche Lincoln, who fought tirelessly for these reforms. These changes will finally bring the $600 trillion derivatives market out of the dark and into the light of day, ending the days of backroom deals that put our entire economy at risk. The narrow end-user exemption in the bill will allow legitimate commercial interests, such as electric cooperatives and heating oil dealers on Main Street, to continue hedging their business risks, but it will stop Wall Street traders from artificially driving up prices of heating oil, gasoline, diesel fuel and other commodities through unchecked speculation.
Confronting Predatory Credit Card Rules
The conference report also includes a provision by Senator Dick Durbin and Representative Peter Welch that I supported to protect our small businesses from complicated predatory rules that big credit card companies could otherwise impose on Vermont grocers and convenience stores. The Durbin-Welch amendment will ensure that a small business will be able to advertise a discount for paying cash, or for using one card instead of another. I do not want Vermonters to pay more for a gallon of milk just because the credit card companies are demanding a high fee on small transactions and are not allowing the grocer to ask for cash instead of credit.
Small States Formula In Neighborhood Stabilization Program
Another amendment I offered that is included in the final agreement is of particular importance to small states such as Vermont. My amendment will guarantee that Vermont and other small states each receive at least $5 million of the $1 billion in new Neighborhood Stabilization Program funds in the bill. Originally created in 2008, this program is designed to stabilize communities that have suffered from foreclosures and abandonment. My amendment overrode language proposed by the House that expressly prohibited a small-state-minimum from being used to allocate funds.
Extractive Industries Transparency
The Extractive Industries Transparency Disclosure provision that I sponsored is another major step forward for protecting U.S. taxpayers and shareholders and increasing the transparency of major financial transactions. This provision is about good governance and transparency so the American people and investors can know if they are investing in companies that are operating in dangerous or unstable parts of the world, thereby putting their investments at risk. This provision also will enable citizens of these resource-rich countries to know what their governments and governmental officials are receiving from foreign companies in exchange for mining rights. This will begin to hold governments accountable for how those funds are used, and help ensure that the sale of their countries’ natural resources are used for the public good.
Federal Reserve Audit
I am also pleased that the bill includes a provision I cosponsored with Senator Bernie Sanders to increase transparency on the bailout transactions made by the Federal Reserve. Under this bill, we will finally have an audit of all of the emergency actions taken by the Federal Reserve since the financial crisis began, to determine whether there were any conflicts of interest surrounding the Federal Reserve’s emergency activities. It is time we know more about the closed-door decisions made by the Federal Reserve throughout this financial crisis.
Taking A Broom To Wall Street Abuses
Mr. President, the Senate has before it today a conference report that will reign in Wall Street abuses, end government bailouts, and give everyday Americans the consumer protection they deserve and expect. It will help restore faith in our markets, which are part of the vital foundation of our economic progress. Taking this broom to Wall Street abuses will help build confidence in our economy and continue our progress toward economic recovery.
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Press ContactDavid Carle: 202-224-3693
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