U.S. CONGRESSMAN MIKE THOMPSON | REPRESENTING CALIFORNIA'S FIFTH DISTRICT

Financial Reform

The recent recession was caused in part by a failure to properly regulate our nation’s financial system. Millions of Americans, including thousands of folks in our district, are still struggling because of the reckless actions of Wall Street executives and big banks. Our ongoing economic recovery depends on common-sense rules to ensure these financial institutions cannot jeopardize our recovery and hurt hard working families and small-businesses once again.

Last year, Congress passed and the president signed the Dodd-Frank Wall Street Reform and Consumer Protection Act – landmark legislation that will crack down on the big banks, protect consumers, and bring greater economic security to families and small businesses across our country. This law put in place the strongest consumer protections in history, with an independent watchdog whose sole job is to enforce these protections and look out for the American consumer. Specifically, the law:

• Creates the Consumer Financial Protection Bureau (CFPB) to ensure that bank loans, mortgages, and credit cards are fair, affordable, understandable, and transparent. I strongly support this new agency and urge the president to nominate Elizabeth Warren as the CFPB’s new director. I encourage you to visit the new CFPB’s website to keep up to date on consumer news: http://www.consumerfinance.gov/.
• Puts an end to “too big to fail” financial firms, providing the government with the tools it needs to manage financial crises. This includes the ability to preemptively dismantle big banks whose risky and irresponsible behavior could bring down the entire economy.
• Ends taxpayer-funded bailouts by requiring big banks and other financial institutions (with $50 million in assets) to foot the bill for any future bailouts. These institutions would pay assessments based on a company’s potential risk to the whole financial system if they were to fail.
• Stops predatory and irresponsible loan practices, including prepayment penalties, deceptive mortgage documentation, and bonus payments for steering borrowers to higher cost loans.
• Imposes tough new rules on the riskiest financial practices by strengthening enforcement by the Securities and Exchange Commission (SEC) to better protect investors and prevent Ponzi schemes; curtailing excessive speculation in derivatives and the growing use of unregulated credit default swaps that devastated AIG and Bear Stearns; and creating more transparency and tougher regulation of hedge funds, private equity firms, and credit rating agencies.

For all its strengths, the Dodd-Frank Wall Street Reform and Consumer Protection Act is still far from perfect. I would have liked to see stronger rules to prevent banks from becoming “too big to fail” and other protections for average Americans. However, this law does take a big step forward in safeguarding against future bank bailouts. As we continue to work to implement this landmark legislation, please be assured that I will continue to advocate for strong consumer protections and also reasonable regulations that do not stifle economic growth or access to credit