[Congressional Record Volume 155, Number 190 (Tuesday, December 15, 2009)]
[Extensions of Remarks]
[Pages E3008-E3009]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         WALL STREET REFORM AND CONSUMER PROTECTION ACT OF 2009

                                 ______
                                 

                               speech of

                            HON. BART STUPAK

                              of michigan

                    in the house of representatives

                      Wednesday, December 9, 2009

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 4173) to 
     provide for financial regulatory reform, to protect consumers 
     and investors, to enhance Federal understanding of insurance 
     issues, to regulate the over-the-counter derivatives markets, 
     and for other purposes:

  Mr. STUPAK. Madam Chair, years of abuse on Wall Street, manipulation 
of our financial markets and expansion of regulatory loopholes have 
harmed American consumers and businesses, leading to the global 
financial disaster last fall. As the U.S. House of Representatives 
sought to craft aggressive financial regulatory reforms, I worked with 
the relevant Committee Chairmen and Democratic leadership to end the 
abuses that have allowed Wall Street to profit at the expense of 
American consumers for far too long.
  Unfortunately, H.R. 4173, the Wall Street Reform and Consumer 
Protection Act of 2009, falls short of ending the practice of Wall 
Street speculators, big banks and the nation's largest financial houses 
(Goldman Sachs, J.P. Morgan, Morgan Stanley, Bank of America and 
Citigroup) operating outside the watchful eye of federal regulators. 
Because this bill does not put an end to many of these abuses, I must 
oppose H.R. 4173.
  As chairman of the Energy and Commerce Subcommittee on Oversight and 
Investigations, I have led a three-year-long investigation into the 
role speculators play in driving up the cost of energy. What we have 
learned from our investigation can be applied across the energy, 
commodity, and financial markets: As long as loopholes exist, 
speculators will manipulate markets and consumers will pay the price.
  I fought for and made part of the American Clean Energy and Security 
Act regulatory reform for the energy and carbon markets. The provisions 
found in the Prevent Unfair Manipulation of Prices, PUMP, Act of 2009 
should have served as a starting point for further reform of the 
unregulated over-the-counter derivatives markets known as ``dark 
markets.'' Unfortunately, this legislative precedent and my amendments 
were ignored in favor of big money interests on Wall Street. But those 
of us who have spent time working on this issue know true regulatory 
reform cannot occur without bringing transparency to all markets and 
subjecting all financial transactions to federal oversight.
  Therefore, I offered two amendments to H.R. 4173 to close loopholes 
and bring strong reform to the unregulated ``dark markets.'' The first 
amendment required all trades to occur on an open marketplace, 
effectively bringing an end to ``dark markets'' so regulators could see 
the transactions. This most fundamental reform would have brought 
sunshine to the largest unregulated financial sector of our economy. 
For example, trades on the regulated markets totaled $80 trillion in 
2008 while trades on the unregulated ``dark markets'' accounted for 
$600 trillion, or 41 times the size of the entire U.S. economy. 
Regulators could not view the transactions, the contracts or the 
financial terms of these trades.
  As Commodity Futures Trading Commission, CFTC, Chairman Gary Gensler 
noted in a letter supporting my amendment, ``As a nation, we do not 
stand for this lack of transparency in other markets.'' Staunch 
opposition from Wall Street led to the amendment's defeat, despite 
Gensler's assertion that: ``your (Stupak) amendment promotes the 
critical goal of promoting transparency without imposing any additional 
cost on business.'' Without providing our regulators the most basic 
tools they say they need to effectively monitor the markets, we cannot 
call H.R. 4173 a true reform bill.

  My second amendment narrowed a loophole that banks and large 
financial houses use to avoid regulation, prohibited credit default 
swap contracts that threaten the stability of the financial markets, 
and prohibited illegal swap contracts from being considered valid in a 
court. A comprehensive financial regulatory reform bill has to close 
the loopholes that allow speculators to control the markets. In 
defeating my second amendment, speculators will be allowed to continue 
their abusive practices.
  Defeating my second amendment was not Wall Street's only success in 
ensuring loopholes remain in place. Banks, large financial firms and 
speculators were able to push through an amendment authored by 
Congressman Scott Murphy that widened the loophole banks can use to 
evade regulation.
  Financial Services Committee Chairman Barney Frank offered an 
amendment to ensure everyone trading in the markets has some ``skin in 
the game'' by requiring collateral be posted up front. The amendment 
was opposed by Wall Street and it ultimately failed.
  Many parts of H.R. 4173 accomplish important financial reform, and I 
support efforts to protect consumers from predatory financial products 
and end taxpayer funded bailouts. The amendment process on the House 
floor offered the opportunity to strengthen the bill in a way that 
delivers true reform across all of our financial markets. 
Unfortunately, Wall Street succeeded in using this opportunity to 
weaken the bill and significantly dilute the impact the legislation 
would have on their practices.
  If regulators cannot shine a light on ``dark markets'' and loopholes 
can be exploited by Wall Street, we are just a few years away from 
another economic crisis. Leaving ``dark markets'' unregulated, 
unchecked and unfazed allows speculators to dictate prices for goods 
ranging from gasoline to bread to life insurance, and leaves consumers 
vulnerable to these financial abuses.
  Today ``dark markets'' operate like a casino, with a commercial 
business betting that the price of a product will move in one direction 
and a Wall Street bank betting against that price change. The only 
difference is that we actually regulate casinos. On Wall Street neither 
the company nor the

[[Page E3009]]

bank are subject to regulation. Only the largest Wall Street banks know 
the price or volume of these trades, leaving federal regulators and 
consumers in the dark. H.R. 4173 does nothing to change this.
  Leaving these markets to police themselves has resulted in the 
Federal Deposit Insurance Corporation, FDIC, taking over 133 banks so 
far this year, a record. When these markets implode, credit across the 
financial system freezes. Small businesses and farmers can't secure 
loans. Community banks, credit unions and businesses are threatened 
with insolvency, and ultimately employees and taxpayers are left out in 
the cold. H.R. 4173 attempts to bring regulation to these markets, but 
leaves loopholes and creates new ones that far outweigh any positive 
reforms in the bill.
  I want to thank Congressman Chris Van Hollen, Congresswoman Rosa 
DeLauro and Congressman John Larson for their strong support in working 
with me to try to strengthen this bill and bring true reform to Wall 
Street.
  As H.R. 4173 moves through the legislative process, I will work with 
Senators Maria Cantwell, Bernie Sanders, Byron Dorgan and others who 
have a shared interest in closing loopholes that remain a threat to our 
economy. It is imperative that the bill be strengthened in the U.S. 
Senate to rein in speculators and end the abusive practices of Wall 
Street's largest financial houses. I hope the Senate can accomplish 
these goals in the form of a final bill I can support.
  I did not vote for the Wall Street bailout last year. Once again, I 
stood up to Wall Street's reckless financial transactions. Now, we need 
more members of Congress to stand with me for effective regulatory 
reform. For I believe, in this one instance where doing too little is a 
far greater threat than doing too much.

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