Congressman Garamendi Says 'No More' to House of Cards Finance Practices
WASHINGTON, DC – Congressman John Garamendi, D-Walnut Creek, California, today voted for a comprehensive financial reform package that will protect consumers and stop predatory behavior on Wall Street. The Wall Street Reform and Consumer Protection Act (H.R. 4173) passed on a 223-202 vote. Congressman Garamendi issued the following statement:
"Our financial sector collapsed and millions of Americans lost their jobs and their savings because Wall Street knew it could get away with just about anything under President Bush. Today, I was proud to say 'no more' with my vote. No more to abusive lending practices, no more to loopholes that allow billions of dollars between large firms to go unregulated, no more to a system that prioritizes short term profit in one sector over the long term health of an entire economy.
"For eight years as California’s Insurance Commissioner, I regulated the largest financial industry in America: the insurance companies. The insurance companies had one commandment: thou shalt pay as little as possible as late as possible. Many in finance have their own commandment: thou shalt build up thy house of cards as fast as possible as profitably as possible without consideration of the long term consequences. The games have to stop; it’s time we created an economy that can withstand the unhinged greed of financiers.
"Under this legislation, consumers will finally have a federal regulator with teeth ready to battle predatory financial firms. We will stop financial conglomerates from becoming ‘too big to fail’ and provide financial and legal assistance to homeowners and renters trying to save their homes. With millions of Americans unemployed, including tens of thousands in my district, we can’t afford further delay on this important package."
The Wall Street Reform and Consumer Protection Act is a comprehensive reform package that protects consumers and investors while demanding improved oversight over financial firms. The bill:
- Creates the Consumer Financial Protection Agency, a new federal agency devoted to protecting Americans from unfair and abusive financial practices. The CFPA will have the authority to bring suit and seek damages against abusive companies;
- Creates the Financial Stability Council, an inter-agency oversight council that will regulate financial firms so large, interconnected, or risky that their collapse would endanger the entire financial system, ending the necessity of future bank bailouts;
- Works to end “too big to fail” firms by establishing an orderly process for dismantling large, failing financial institutions and preventing additional commercial companies from owning banks or industrial loan corporations;
- Incorporates the mortgage reform and anti-predatory lending bill previously approved by the House and includes four billion more in housing relief, requiring lenders to ensure borrowers can repay their loans, prohibiting lenders from needlessly steering borrowers into more risky loans, increasing penalties for irresponsible lending, providing renters with a new 90 day window to move if their leased property falls into foreclosure, and providing competitive grants for legal services available for homeowners and tenants;
- Requires almost all advisors to private pools of capital like hedge funds and private equity firms to register with the SEC, closing the loopholes that previously allowed them to avoid the risk controls of other financial firms;
- Requires all lenders to retain at least five percent of the credit risk associated with any loans that are transferred, sold, or securitized, helping to control risky lending practices;
- Creates the Federal Insurance Office to monitor all aspects of the insurance industry, including identifying gaps in the regulation of insurers that could create another financial crisis;
- Requires full disclosure of financial firms’ compensation structures and gives shareholders the opportunity to give an advisory vote on executive compensation practices;
- Strengthens the Securities and Exchange Commission by increasing their budget to hire additional regulators, expanding their anti-fraud oversight powers, and granting them more authority to regulate municipal financial advisors;
- Rewards and protects whistleblowers in the financial industry; and
- Regulates, for the first time in U.S. history, the over-the-counter derivatives marketplace. Millions of contracts between large banks have gone unregulated for years, creating an unregulated interconnected financial nexus that can lead to systematic insolvency when individual firms fail.