Civil Rights Coalition Calls For Strong Consumer Protections In Final Financial Reform Bill
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Posted by Tyler Lewis, civilrights.org
Congress is nearing completion of its work reforming Wall Street. The Leadership Conference and its allies in the Americans for Financial Reform (AFR) coalition are working to ensure that Congress includes strong protections for consumers and effective regulation to hold Wall Street accountable — and stave off future crises that can wreck the economy and upend the lives of millions of Americans, especially members of economically vulnerable communities.
Some of the priorities of the coalition for the final bill include:
- Establishing a Consumer Financial Protection Bureau that is independent, has broad enforcement authority, and the necessary funding to protect consumers. There should be no carve-outs or exceptions for car dealers or other special interest groups.
- Ending the "Casino Economy" and shining a light on the shadowy derivatives market, by creating new rules for this $600 trillion market that would require that banks' bets be backed by capital. Congress must also ensure that the new regulations not be undermined by exemptions or enforcement gaps.
- Ensuring comprehensive regulation of leveraged investment fund managers such as hedge funds, leveraged buyouts, and venture capital funds which now operate almost entirely without public oversight. Stronger House language is needed in conference to change this.
- Addressing Systemic Risk by separating risky and speculative activities from the basic commercial banking business of making loans to consumers and businesses, through a strengthened Volker rule and rules that require derivatives trading to be separated from insured deposits. Congress must also move to require that banks and speculators – not taxpayers – pay the costs when financial institutions fail.
- Protecting investors by requiring all investment advisors to put their clients' interest first. Without the changes in the House bill, brokers and insurance agents will be able to present themselves as advisors, but recommend products that they know are not in their customers' best interests in order to turn a profit.
- Reforming Bad Mortgage Lending Practices by creating strong, enforceable standards for home lending to protect American families' largest investments – their homes – and to prevent lending abuses. Congress must also include provisions to protect families from losing their homes to foreclosure.
- Taking on conflicts of interest and holding credit rating agencies accountable for stamping AAA seals of approval on what were actually enormously risky products. Congress should grant the Securities and Exchange Commission (SEC) the authority it needs to hold credit rating agencies accountable, and insulate the agencies from industry pressure to loosen standards with the "Franken Amendment" language.
- Reforming Federal Reserve governance and increasing transparency by barring member banks from voting for regional Fed directors, giving the President and the Senate the right to select the powerful New York Fed president, and mandating audits of the Fed.