FINAL WALL STREET REFORM LEGISLATION PASSES HOUSE06/30/10
FOR IMMEDIATE RELEASE
Wednesday, June 30, 2010
CONTACT: Cullen Schwarz
Office: (202) 225-5802
FINAL WALL STREET REFORM LEGISLATION PASSES HOUSE
Largest Overhaul of Wall Street Rules Since Depression Passes to Protect Economy from Future Financial Meltdowns and End Taxpayer Bailouts
(Washington, DC) – The U.S. House of Representatives this evening passed historic Wall Street reform legislation. The reform would crack down on Wall Street greed and the reckless investment practices that led to a global financial crisis, caused a $17 trillion loss in retirement savings and net worth and caused the economic downturn from which the nation has yet to fully recover. Wall Street reform will protect the economy from future meltdowns, create strong new consumer protection rules and ensure an end to taxpayer bailouts of financial institutions. The bill represents the largest overhaul of the nation’s financial rules since the Great Depression. (Click here for a detailed summary of the Wall Street Reform and Consumer Protection Act.)
Representative Gary Peters has been a leader in the fight for Wall Street reform from the beginning. Peters serves on the Financial Services Committee and helped shape the original reform bill the House passed last year. He was also selected to serve on the House-Senate conference committee to reconcile the different reform bills passed in each chamber. It is rare for a Member in his first term to be selected to a conference committee, especially on such an historic issue. Peters was selected to serve on the committee because of his 22 years of experience as a family investment advisor, his expertise on financial issues and his leadership in crafting the House’s original reform bill.
“Casino-style Wall Street investments almost caused a second Great Depression and we need definitive action to hold Wall Street accountable and prevent future crises,” said Peters. “Wall Street greed and recklessness rippled across the economy. The financial crisis hurt small businesses, cost us jobs and decimated retirement accounts and home values—then the perpetrators received a bailout and giant bonuses. We need reform to protect the economy and small businesses, safeguard retirement savings and home values, defend consumers against financial scams and stop taxpayer bailouts once and for all.”
Peters successfully fought for many key provisions included in the final Wall Street reform legislation including measures to protect and empower shareholders, a company’s true owners. Most provisions of the Peters-authored Shareholder Empowerment Act (H.R. 2861) were included in the final legislation. These measures will give investors greater ability to ensure that executives act in shareholders’ long-term interest rather than make irresponsible bets for their own short-term gain, the sort of reckless investing that led to the financial crisis. Peters’ bill would also give shareholders the ability to keep executive pay and bonuses in check by making common sense changes to the executive compensation approval processes.
“Individual shareholders are a public company’s true owners,” said Peters. “Shareholders should have a say on executive pay and the ability to recapture undeserved bonuses. Shareholders should also have the power to ensure that companies are run soundly with their long-term interest in mind rather than having Wall Street traders gambling with people’s retirement accounts and other savings.”
Peters also successfully added an amendment to help ensure the bill does not overreach and hurt non-Wall Street businesses. The original House and Senate bills contained an exemption on new derivatives regulations for companies who use derivatives in a legitimate way to hedge their exposure to fluctuating costs of energy or raw materials. Peters’ amendment would extend this protection to manufacturers' captive finance companies if they are hedging an actual business risk associated with interest rate or currency fluctuations. New regulations would have cost Ford and Ford Credit $2.5 billion over the next five years. Peters’ amendment saves Ford and other manufacturers from taking a financial hit that affected their ability to create jobs.
Last year Peters authored the amendment that passed as part of the original House bill that would force giant Wall Street banks to pay back every penny of the bailout initiated in 2008, shortly before he became Oakland County’s newest representative. Peters fought vehemently to have this provision included in the final bill but Senate negotiators voted to reject the provision. Peters will continue to pursue other means for requiring Wall Street institutions to pay back taxpayers for any shortfall from the Troubled Asset Relief Program.
“I will not stop fighting until Wall Street institutions pay back every penny of the taxpayer bailout,” Peters said. “It is only fair that the people who created the mess are held accountable and give taxpayers their money back. Common sense does not always prevail in Washington, but we can’t and won’t give up.”
The final Wall Street reform legislation to be voted on today would:
- Create tough protections for the economy against the reckless investments on Wall Street and rein in the casino-style investments that led to 2008 financial meltdown, including new rules for derivatives and mortgage-backed securities;
- Stop all future taxpayer bailouts by responsibly shutting down—rather than bailing out—giant financial institutions in a structured way so they do not impact the broader economy, and force the financial sector to pay for this dissolution of troubled firms;
- Empower shareholders, a company’s true owners, to have more say in how their company is run (including having input on pay and bonuses, more power in corporate board elections and the ability to help rein in reckless investing);
- Develop tough new protections for consumers using financial products such as a car loan, student loan or mortgage, including cracking down on the predatory mortgage lending that helped create the housing bubble. This section also cracks down on individuals who attempt to fraudulently obtain mortgages they can’t afford.
The bill has been called the “strongest set of Wall Street reforms in three generations” by Elizabeth Warren, Chair of the nonpartisan Congressional Oversight Panel, and has been endorsed by the AARP, Consumer Federation of America, Consumers Union, Council of Institutional Investors, National Fair Housing Alliance, National Restaurant Association, Public Citizen, SEIU, and US PIRG, among other organizations. The bill was publicly debated for more than 50 hours, and includes over 70 Republican and bipartisan amendments.
Click here for a detailed summary of the Wall Street Reform and Consumer Protection Act.