Regulating Wall Street's Abuses
I helped write the Wall Street Reform and Consumer Protection Act – a set of historic reforms to protect the economy of our country and the financial security of our neighbors in the San Fernando Valley. I’ve outlined some of these important reforms below.
Tough Regulation for Wall Street
The financial crisis exposed many abuses by giant Wall Street firms. Consumers were targeted by unfair practices, ranging from deceptive credit card rates to risky subprime mortgages. That is why I worked with my colleagues on the Financial Services Committee to ensure that the Wall Street Reform and Consumer Protection Act (HR 4173) contained the strongest consumer protections. The bill creates a new, powerful watchdog called the Bureau of Consumer Financial Protection, which will ensure that the products and services sold by Wall Street to consumers are fair and marketed honestly.
No More Bailouts
I also led the effort to oppose TARP, the bailout for big Wall Street banks, which unfortunately was adopted in late 2008. As originally proposed by the Treasury Department last year, the financial reform bill contained provisions that would have given the Treasury Department permanent, unlimited authority to bail out Wall Street giants using taxpayer dollars. However, I was able to lead a successful, bipartisan effort to remove these bailout provisions -- and the bill ends TARP immediately, thus returning $215 Billion to the Treasury, which could otherwise fund additional Wall Street bailouts.
Requiring Fair Credit Ratings
As you may know, bond rating agencies are the businesses that grade the creditworthiness of private and government debts. I have long argued that perhaps the single greatest cause of the financial meltdown was the practice of the credit rating agencies giving high ratings to bonds backed by questionable mortgages. Together with U.S. Senator Al Franken (D-MN), I worked to successfully amend the Wall Street Reform and Consumer Protection Act to end conflicts of interest in the selection of rating agencies by bond issuers. My amendment requires an independent agency to assign credit rating agencies impartially. Thankfully, we will end the system where credit rating agencies compete with each other to secure large fees from bond issuers by giving high ratings to bad bonds.
Congressman Brad Sherman, a CPA, is a senior member of the House Financial Services Committee. He represents California’s San Fernando Valley.