Wall Street Reform Campaign
Wall Street Reform is Under Attack
We took action to rein in the Wall Street banks
Through secret deals, risky lending practices, and irresponsible self-dealing, Wall Street nearly collapsed our entire economy in 2008.
Hundreds of thousands of citizens took action, demanding that we hold the big banks accountable. And in July 2010, Congress passed the most important Wall Street reforms in generations. The Wall Street Reform and Consumer Protection Act contained key provisions that:
• Creates the first agency to project consumers’ interests on Wall Street, called the Consumer Finance Protection Bureau. The Bureau’s mandate is to focus on the risky lending practices that other regulators ignored and resulted in millions of Americans losing their homes and savings.
• Ends the “too-big-to-fail” system which lead to the $700 billion government bailout for mega-banks by giving the federal government the authority to safely shutter failing banks. This will protect taxpayers from future bail-outs.
• Brings the shadowy $600 trillion derivatives market into the open. These “bets on bets” ricocheted through the whole market without any oversight, leaving previously stable financial institutions with hundreds of billions of dollars of “toxic assets” that threatened to collapse once-venerable banks.
• Reforms the mortgage lending system that lead to the housing collapse and foreclosure crisis.
But, Wall Street has launched a three-pronged attack
Wall Street interests started by writing big checks to conservative politicians who want to gut the law. In the 2010 cycle alone, individuals associated with the securities and investment industry contributed $78.7 million to congressional candidates. This does not even account for direct spending on elections by corporations and other interests, which went 2-to-1 for conservatives this past cycle.
Now they are pushing their new allies in Congress to defund or repeal key consumer protections. Wall Street’s contributions paid off in 2010. They helped elect a slate of Tea Party conservatives and, more importantly, swept Republicans into control of the House of Representatives. Speaker of the House John Boehner wants to repeal the law.
The new Chair of the House Financial Services Committee has promised an “extensive review” of the new law, and announced his intent to scrutinize new regulations using a little-used 1996 law. A top Republican on the committee has pledged to defund the Consumer Financial Protection Bureau. And another wants bank regulators (long cozy with the banks) to be able to overrule the Bureau’s rules.
And, a number of winning Tea Party candidates such as Rand Paul ran on platforms that included repealing financial reform.
At the same time, the big banks are lobbying the government not to enforce the law. Before the ink was dry on the new law, Wall Street banks started working to undermine it. They started by doubling down on lobbying the government not to enforce the law. The securities and investment industry has spent $79.5 million dollars on lobbying in 2010 alone, often seeking special exemptions and ways to weaken the law.
Wall Street lobbyists and other big companies have had more than 450 meetings with government officials charged with enforcing the law--90% of the total number of meetings these officials have disclosed, including 18 on one day in September. Goldman Sachs had 21 meetings alone. These banks are pushing regulators to ignore Congress’ instructions and seeking special exemptions from the law.
For example, American Banker characterized the financial services industry as desiring “so many exceptions from the Volcker Rule’s limits on risky activities that it might as well not exist at all.”
And, the American Securitization Forum has been pushing to exempt interest-only mortgages (which caused many consumers to lose their homes) from a new requirement that lenders retain five percent of every loan on their books, which requires these lenders to maintain some “skin in the game” to discourage risky lending practices.
Fair Share is working to defend critical consumer protections
With President Obama in the White House and Democrats controlling the Senate, conservatives will not be able to repeal the entire law. But, they can defund the Consumer Financial Protection Bureau and other key agencies responsible for enforcing the law; delay implementation with endless hearings to slow down regulators; and poke loopholes in the new law with exemptions for special interests.
In the face of these attacks, we must make sure that our elected leaders stay vigilant and prioritize defending the Wall Street Reform act.