JOHNSON TAKES TO FLOOR TO MARK ANNIVERSARY OF WALL STREET REFORM
July 18, 2011
WASHINGTON – Senate Banking Committee Chairman Tim Johnson (D-SD) took to the Senate floor today to speak about the importance of Wall Street reform and the costs of the financial crisis. The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law on July 21, 2010, one year ago this Thursday.
Below is Chairman Johnson’s statement as prepared for delivery:
Mr. President, Thursday marks the first anniversary of President Obama signing the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. As Chairman of the Banking Committee I have a responsibility to oversee implementation of this critical new law.
The Wall Street Reform Act was a direct response to the worst financial crisis since the Great Depression. While it appears that many on Wall Street, and even some here in Washington, have already forgotten the painful costs of inadequate financial regulations – I have not. And neither have the millions of Americans who lost their jobs, their homes, or their savings, and who are still waiting for the recovery.
The financial crisis didn’t just happen by itself. It was the result of reckless and irresponsible behavior on Wall Street, a lack of consumer protections, and failure by financial regulators to take action even as the warning signs grew ever larger.
In response to the devastation, Congress passed new financial reforms that created a sound regulatory foundation to protect consumers and help prevent future crises.
However, these reforms have been under constant attack since their inception. Opponents of Wall Street reform continually repeat misleading claims that the new law was hastily conceived and will harm our economy.
The truth is the Wall Street reform law is a product of nearly 50 Senate hearings, and scores more in the House, that identified the abuses and loopholes that fueled the catastrophe and helped develop clear proposals to end them.
After a long series of hearings that began in 2007 and 2008 with examination of the turmoil in the mortgage and credit markets, and after months of hard work by bipartisan working groups of Senators, the Banking Committee reported out a Wall Street reform bill that incorporated many Republican ideas.
On the Senate floor, the bill had a thorough debate in an open process that lasted more than three weeks. Fifty-six amendments were considered and thirty-two amendments were approved, fifteen of which were Republican sponsored amendments and twenty-two were bipartisan amendments. Finally, the bill was reconciled with the House version at an open Conference Committee which worked through more than 100 additional amendments.
In short, through a rigorous, bipartisan, and transparent process, we produced a comprehensive reform bill that the times demanded and the American people deserved.
The Wall Street Reform law enhances consumer protections to help ensure people can make financial decisions with honest information, and it roots out predatory lenders who fueled the subprime mortgage bubble. The reforms we passed one year ago will no longer allow the shadow banking system that nearly destroyed our economy to continue to escape the light of day.
The Wall Street Reform law also enhances investor protections.
Mr. President, during the financial crisis, investors suffered enormous losses when their retirement accounts or other assets were decimated. Some had invested in companies with compensation systems that encouraged executives to take on unmanageable risks. Some relied on mutual funds or pension funds that had bought mortgage-backed securities based on predatory loans that borrowers could not repay.
New reforms will enhance transparency, increase accountability and allow oversight of previously hidden parts of the financial system.
Unfortunately, some powerful Wall Street apologists are trying to re-write history. They are claiming that new regulations are overly burdensome and will hurt their bottom line and the economy.
Mr. President, gaps in regulation hurt the economy. Bad, reckless decisions on Wall Street hurt the economy.
But many top financial executives have apparently forgotten that the only reason they are still in business is that the American taxpayer saved them.
Now many of these financial institutions have nearly fully recovered, while Main Street Americans continue to pay the price for those bad decisions and inadequate regulations.
The Wall Street Reform Act established responsible rules to make our financial system work for the benefit of all Americans, so that we never return to the days of too big to fail bailouts, backroom derivatives deals, predatory subprime mortgages, and the threat of economic collapse.
Passing the Wall Street Reform Act was a monumental achievement, but there is much work left to be done. Now the financial regulators, the experts who have made it their life’s work to understand these issues, must work to write rules and implement these reforms. This will take time, and we must get it right.
If the attacks on the law and its implementation are successful in weakening or eliminating these new protections, however, our economy will once again be at risk. Since I became Chairman earlier this year, the Banking Committee has held more than 25 hearings and bipartisan briefings on financial reform. We are exercising our oversight authority, following the regulators’ progress closely, and are committed to seeing the process of reforming Wall Street through to completion.
We all remember the economic nightmare we lived though three years ago, and we should never forget it. That is why I take my responsibility as Chairman of the Banking Committee and custodian of this new law so seriously. I am fully committed to helping ensure Congress does its part to hold our regulators accountable and to providing Americans with a financial system they can trust.