FOR IMMEDIATE RELEASE
Tuesday, June 7, 2016
Contact: Nick Jacobs, 202-618-6430 or njacobs@bettermarkets.com
Washington, D.C. – Dennis Kelleher, President and CEO of Better Markets, issued this statement on the release today of House Financial Services Committee Chairman Jeb Hensarling’s Republican proposal to dismantle the Dodd Frank financial reform law:
“Missing an historic opportunity to propose a serious plan that would have received bipartisan support, the Chairman of the House Financial Services Committee, Jeb Hensarling, instead outlined the Republican vision for gutting the 2010 Dodd Frank financial reform law. Mr. Hensarling’s proposal is little more than a laundry list of every wish Wall Street and its lobbyists ever asked for. This vision is a dream for Wall Street, but a nightmare for Main Street.
“This plan makes another financial crash much more likely, guarantees future taxpayer bailouts of Wall Street and will kill jobs and growth. How? By repealing the Volcker Rule, it will again allow Wall Street’s biggest firms to gamble with taxpayer insured deposits and make trillion dollar bets. It sets equity capital requirements on banks at just 10% in exchange for eliminating the most important protections of Dodd Frank. That means that, after losses of just 10 cents on the dollar, taxpayers will have to bailout Wall Street again. In 2008, the capital shortfall was at least double 10%, and the only reason that the losses weren’t greater was because taxpayers bailed out Wall Street’s biggest banks to end the panic. This plan recreates the dangerous, high risk unregulated shadow banking system by gutting the Financial Stability Oversight Council and eliminating its authority to identify nonbank threats to the financial stability of the United States, which would guarantee more disasters like the unforeseen collapse and bailout of AIG. And, while deregulating finance, it handcuffs the regulators with so many new rules that they’ll never be able to police Wall Street.
“Lastly, the plan purports to impose bigger penalties on financial criminals in the future. That’s a cruel fraud on the American people. It will never happen, and we know that because not one single financial executive from a big, powerful, well connected Wall Street firm has been punished for the 2008 crash. If they weren’t punished last time, they won’t be punished next time and no one should believe they will be just because some politician says so.
“This is a huge missed opportunity for Chairman Hensarling and the Republicans. The Chairman was right when he said that ‘bank capital is the most basic element in making a financial system healthy, resilient and reliable for economic growth’ and that ‘a strongly capitalized banking sector can help avoid the recurrence of a financial crisis of the magnitude we saw in 2008.’ He should have rejected the Wall Street wish list and focused on meaningful levels of real equity capital, but 10% is far too little and the trade-offs that gut so many other essential protections are totally unwarranted. To seriously protect Main Street and to genuinely put investors ‘in front of hardworking taxpayers,’ he should have proposed that Wall Street’s biggest financial firms fund themselves with at least 25% of real equity capital. That would have begun a serious bipartisan discussion about how Wall Street’s biggest, most dangerous financial firms should be regulated.”
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.
