WASHINGTON, D.C. - U.S. Sen. Sherrod Brown (D-OH), chairman of the Senate Banking Subcommittee on Economic Policy, issued the following statement following the Senate Banking Committee's markup of financial reform legislation.
"Two years ago we teetered on the edge of another Great Depression. Wall Street had gorged itself on so much junk debt that the markets panicked. At the request of the Bush Administration, we took urgent, bipartisan action to pull ourselves back from the brink of economic collapse.
"We saved the banks temporarily, but Main Street was not so lucky. Wall Street recklessness, aided and abetted by lax regulation, drove more than 7 million Americans into unemployment and caused nearly 6 million home foreclosures.
"It's been two years since that near miss. But Wall Street can and is continuing to risk Main Street jobs, Main Street pensions, and Main Street homes on get-rich-quick schemes as reckless as the ones that collapsed on them two years ago.
"There are those on this committee who will try to delay action for as long as possible. They are hoping the American people will forget the meltdown, forget the bailouts, and forget that Wall Street knowingly gambled away the economic security of millions of middle class families.
"Well, Americans aren't going to forget. And Congress reports to Americans. No more meltdowns, no more bailouts. Our nation cannot afford to let Wall Street remain a casino with the odds stacked against everyday Americans.
"We need rules that ensure Wall Street investors cannot bet the farm in Chillicothe, the home in Cleveland Heights, or the job in Wilmington on a financial bubble that is bound to burst.
"Some of my colleagues on this panel have said that the banks' interests are more important than protecting the American public. I think that's a false choice.
"We have seen all too painfully that a business strategy that relies on hoodwinking borrowers and investors is destined to fail. We cannot predict the next economic disaster, but if we protect consumers we can probably prevent it.
"Mr. Chairman, I want to commend you for moving forward with your bill. As you know, I believe the bill should be strengthened to make absolutely certain there are no more meltdowns and no more bailouts.
"I'd like to put in stronger safeguards against behemoth banks that control so much of the nation's wealth that they could singlehandedly send our economy spiraling.
"Our economy cannot prosper with an ever-growing share devoted to finance. In the 1980s manufacturing made up 25 percent of GDP and financial services was 11-12 percent. By 2005 the two sectors had flipped: manufacturing was just 12 percent of GDP while the financial services industry was about 20-21 percent.
"We need to get out of the business of propping up Wall Street and ensure we don't get put in this position again. In my view, Wall Street banks wrecked our economy, got a taxpayer-funded bailout, and are profiting again while working Americans continue to suffer.
"Yesterday was a momentous day, when Congress passed the most important piece of health care legislation in fifty years. Today, this Committee can continue its work on behalf of the steelworkers in Steubenville, the farmers in Findlay, and the auto workers in Ashland.
It has been almost four months since you introduced your bill, Mr. Chairman. We can't sit by any longer and continue to do nothing. We need to move now. No more meltdowns. No more bailouts."
Brown successfully fought to include several items in the Manager's amendment offered today by Chairman Chris Dodd.
• Brown amendment #100 would require the consumer financial protection bureau and other regulators to respond in a timely manner to consumer complaints. This amendment responds to a number of complaints Brown has received from Ohio constituents about the inability of regulators to respond to consumer complaints about banks, and their lack of authority to require banks to work with consumers with concerns over mortgages, credit cards, small business loans, and other financial products. The amendment would also establish a Private Education Loan Ombudsman within the Bureau to help streamline assistance to Americans struggling with private student loan issues. Brown has proposed similar stand-alone legislation establishing an ombudsman to helping private student loan borrowers.
• Brown amendment #106 would require the SEC to improve investor access to information on investment advisors and broker-dealers who have engaged in fraudulent activities. This amendment follows an alleged Ponzi scheme whereby an investment advisor defrauded hundreds of Northeast Ohio investors and retirees by urging them to invest in nonexistent stocks. Brown's amendment is aimed at ensuring that investors have information of an advisor's criminal history.
Other amendments filed by Brown include:
• Brown amendment #101 - Would give Bureau a veto over banking regulators' rules that put the financial security of U.S. consumers at risk. As it stands banking regulators could veto rules established by the consumer protection bureau, but the consumer protection bureau couldn't veto rules established by banking regulators. The purpose behind creating the Bureau is to make consumers' interests equal to bank interests. If the banking agencies can stop Bureau rules, the Bureau should have equal input in the other agencies' rules.
• Brown amendment #102 - Would prohibit credit bureaus from lowering a consumer's credit score when he/she closes an account because the credit card provider has changed the interest rate or another significant contract term. Under the Credit CARD Act, when a credit card provider changes the interest rate or other significant terms, the consumer has the choice to keep using the card, or cancel the card and pay off the balance over time - under the original terms. However, as it stands, when a consumer closes a line of credit, his/her credit score is lowered. This protects consumers from being penalized for events that are out of their control.
• Brown amendment #103 - Would prevent any action by the Director of Federal Housing Finance Agency (FHFA) in relation to Fannie Mae or Freddie Mac from extinguishing existing claims by plaintiffs. In 2004, a class action suit was brought against Fannie Mae for accounting fraud, with the Ohio PERS as the lead plaintiff. The case is still pending, and this amendment preserves the public employee pension plans' entitlement to recovery for any wrongdoing.
• Brown amendment #104 - Would put normal employees - not executives - in line to get paid through orderly liquidation. Currently, the bill does not give them priority in the line of unsecured creditors. The amendment also prevents the Federal Deposit Insurance Commission (FDIC), as receiver for any failing company, from interfering with union contracts unless absolutely necessary. If banks' creditors are going to get paid out when a bank fails, it's only fair that innocent employees get paid for the work that they have done.
• Brown amendment #105 and #106 - Would help prevent bailouts of too-big-to-fail financial institutions by limiting the amount of debt they can carry. Reining in Wall Street's cycle of excessive debt will ensure that no Wall Street bank ever becomes too big or too indebted to fail in a way that wrecks the entire U.S. economy.
• Brown amendment #108 - Would require credit rating agencies to register with the Securities and Exchange Commission (SEC). Right now, registration is optional, which means that some agencies can evade oversight.
• Brown amendment #404 and #405 - Would require the Commodity Futures Trading Commission (CFTC) and SEC to initiate rule-setting standards related to conflicts of interest in ownership of the clearinghouses that set terms for derivatives trades. It would restrict shareholder ownership of a clearinghouse by the large banks to 20 percent, separately or in aggregate. It would also prohibit large financial institutions from controlling a majority of the board and would require CFTC to set rules for self-dealing. This would help prevent big banks from setting their own rules for their derivatives trades and from tilting the playing field in their favor.