DEMOCRATS BRAZENLY OPPOSE BETTER CAPITAL STANDARDS
June 18, 2010
WASHINGTON, DC, Friday, June 18, 2010 -- U.S. Senator Richard Shelby (R-Ala.), ranking Republican on the Banking, Housing, and Urban Affairs Committee, today released a statement regarding Senate Democrats' opposition to an amendment related to capital standards that Republicans offered yesterday evening during the financial reform conference committee proceedings.
A major contributor to the recent financial crisis was federal financial regulators' lack of diligence, coordination and foresight on matters fundamental to the stability of the financial system as a whole. Among the most fundamental of such matters is capital standards, which ensure that financial institutions have adequate funds on hand to weather their own missteps or systemic crises. Current Democrat proposals create a new Financial Stability Oversight Council - comprised of the Secretary of the Treasury, the Chairman of the Federal Reserve, the Chairman of the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Chairman of the Securities and Exchange Commission, the Chairman of the Commodities Futures and Trading Commission, the Director of the Consumer Financial Protection Bureau, and the Director of Federal Housing Finance Agency - but contain no requirement that these entities coordinate to assess the effect capital rules proposed by any one of them might have on the stability of financial system in totality.
The Republican amendment called for the new Financial Stability Oversight Council to jointly study capital standards proposed by any regulator among them and assess the impact on the stability of the U.S. financial system and the safety and soundness of financial institutions. The Senate Democrat conferees, each of whom also opposed consideration of the effect new consumer protection rules would have on the safety and soundness of financial institutions, rejected the amendment 7-5. Shelby's statement is as follows:
“The Democrats’ blind disregard for the safety and soundness of our financial system throughout the regulatory reform process has been astonishing. It is nonetheless shocking that they opposed a straightforward requirement that any new capital rules take into account implications for the stability of the financial system before taking effect. If Democrats’ new Financial Stability Oversight Council is to have no role in fundamental matters affecting the financial stability of the system such as capital standards, then what is its purpose?
“Although the Democrats’ clearly demonstrated that they have no interest in learning whether new capital standard proposals will have a disparate impact on community banks, this vote was not about Main Street versus Wall Street. This vote was simply about doing the diligence necessary to inform decisions that will directly affect the soundness and competitiveness of our financial system and economy. It is just the latest disappointing example of Democrats’ reckless and cavalier attitude toward these considerations that directly impact the financial well being of the American family and economy.”
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