Americans have paid too high of a price for the greedy behavior of Wall Street.
Eight years of Wall Street pursuing short-term profits at any cost was in large part responsible for the 8 million jobs and $17 trillion in retirement savings and personal investments Americans have lost. This is far too steep a price to pay for Wall Street's misdeeds.
The legislation President Obama signed into law Wednesday will help rein in Wall Street, put safeguards in place to help prevent future bailouts of big banks, and create a consumer financial protection bureau. It's an historic piece of legislation, and I'm proud to have supported the bill.
Taxpayers should never have to pay the price for Wall Street's irresponsibility. The Wall Street Reform and Consumer Protection Act will help prevent the risky financial practices that led to the financial meltdown and put safeguards in place to prevent large financial firms from gambling with Americans' retirement and college savings and home values. The bill creates a process to shut down large, failing firms whose collapse would put our entire economy at risk. After exhausting all of the company's assets, additional costs would be covered by a "dissolution fund," to which all large financial firms would contribute.
Since the financial crisis began, I've said that we must enact these changes in order to minimize the risk that we have to bail out big banks again. I would have liked to see stronger rules to prevent banks from becoming "too big to fail," but this bill puts many good protections in place for the American people.
This new law also puts some strong protections in place for ordinary Americans, so that we won't be taken advantage of by unfair and abusive financial practices. Before the financial crisis seven regulators shared responsibility for looking out for consumers with mortgages, auto loans and credit cards, but none treated consumers as a top priority. The bill creates the Consumer Financial Protection Bureau (CFPB) to make sure that there is one agency whose only job is to look out for consumers. They will be tasked with making sure that lenders provide clear and accurate information to families and small businesses to ensure that bank loans, mortgages, and credit cards are fair and affordable.
Just like the Food and Drug Administration does for medical safety, the CFPB will set safety standards to prevent practices such as hidden credit card fees, deceptive "fine print," and other financial abuses that have escaped oversight so far.
The new law will also help put an end to abusive practices by the financial industry. Mortgage brokers and bank employees will no longer be able to earn bonuses based on the type of loans they sell a client. This will help eliminate any incentive to push high-interest loans on borrowers (who might otherwise qualify for a better deal) in order to inflate bank profits.
And the law will help clean up after the mess created by the under-regulated mortgage industry. State and local governments will be eligible for a part of the $1 billion in neighborhood stabilization funding provided in this bill. This will allow local governments to combat the problems that go along with high concentrations of foreclosures by rehabilitating, redeveloping, and reusing abandoned and foreclosed properties.
The bill is not perfect. But it does take a big step forward in putting protections in place for average Americans, and safeguard against future bank bailouts. We can never again make the American people pay for the excesses of Wall Street.
Del Norte County is part of the First Congressional District service by U.S. Rep. Mike Thompson, D-Calif.