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Both sides are still negotiating or, depending on whom you listen to, theyre not. Other issues have taken center stage in the past several days: the near-bombing of Times Square, the disastrous oil spill in the Gulf of Mexico and the tough new immigration law in Arizona.
But financial regulatory reform is still out there, still on the front burner, still an issue fraught with political peril for both parties. Some of the major players on Capitol Hill have shied away from weighing in on the topic, citing the sensitive and ongoing nature of the conversations. But other key lawmakers are sharing with Roll Call readers their views on where the debate ought to go in the tense final days whats being discussed, whats essential and whats being forgotten.
The economic landscape has undergone significant changes since the beginning of the economic crisis, and the Wall Street reform legislation currently being considered in the Senate will make further changes. While many issues have been touted as benefits of Wall Street reform, one that has been overlooked is how this legislation will enhance the safety and soundness of depository institutions.
America needs smart financial reforms that protect investors from fraud, address government regulatory failures and keep the government in the role of an unbiased quality-control technician instead of a corporate owner or bailout backstop. But if the Democrats in Congress get their way, we can expect more bailouts, more centralized control of our economy and more waste, fraud and abuse. Indeed, when regulators are given unchecked power and limitless discretion, they become unmanageable.
Over the past few weeks, theres been a lot of talk and much ink spilled about solving the problem of banks that are too big to fail. Sen. Sherrod Brown (D-Ohio) and I, along with Sens. Bob Casey (D-Pa.), Jeff Merkley (D-Ore.), Sheldon Whitehouse (D-R.I.), Tom Harkin (D-Iowa) and Roland Burris (D-Ill.), introduced a bill to place strict limits on the size and leverage used by systemically significant banks and nonbanks alike.
The old joke that circulates around Capitol Hill (at least on the House side) is that the Senate is Washingtons legislative hospice: a place where good bills and ideas go to die a slow and quiet death.
For the past few years, the American taxpayer has been forced to rescue Wall Street institutions from self-inflicted financial ruin. While Main Street continues to bear the pain associated with poor financial choices, the bailout precedent provides little incentive for financial institutions to change their ways and avoid making irresponsible decisions.
Alan Greenspan, the former Federal Reserve chairman and one of the architects of financial deregulation, recently testified to the effect that no one could have predicted the Wall Street collapse of 2008. Really?
As Congress continues to debate legislation that would reshape our financial regulatory system, there is an issue that has garnered relatively little attention, yet it has the potential to shutter thousands of small businesses while fundamentally altering the way families in smaller communities get affordable mortgages. That issue is risk retention.
The people who live and work in the 35th Congressional district of California are thousands of miles from the financial district of New York City. Many of my constituents are working-class and middle-class blacks and Latinos, certainly not Wall Street moguls and in many cases not even investors or stockholders. However, the actions of stockbrokers, traders, bankers and fund managers have profound effects on the families that I represent.
When the Democrats claim they will now hold Wall Street accountable, I guess it depends on what your address is on Wall Street or perhaps who you know in Washington. The Democrats clearly anoint winners and losers in the financial regulatory restructuring bill sponsored by Sen. Chris Dodd (D-Conn.), and it is particularly interesting that the Dodd bill, and other Democrat-supported proposals, supposedly intended to close loopholes, actually create loopholes that benefit many people on Wall Street.
To say that the past few years have been financially challenging would be an understatement. To further say that we are clear of future foreclosures and that where we live doesnt matter when it comes to qualifying for bank loans is simply not true. The 30th Congressional district of Texas, like many communities, is diverse, and its residents should not be denied bank loans because of where they live.