[Congressional Record Volume 156, Number 100 (Wednesday, June 30, 2010)]
[House]
[Pages H5282-H5283]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
WALL STREET REFORM
The SPEAKER pro tempore. Under a previous order of the House, the
gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 minutes.
Ms. KAPTUR. Mr. Speaker, I rise to share my major disappointment and
key concerns with the so-called Wall Street reform bill that just
passed this House and why I voted ``no'' on this measure. Bottom line,
the bill does not fundamentally change the skewed financial power
relationship between Wall Street and Main Street. That relationship has
so gravely hurt our Nation.
The bill allows the Wall Street institutions to maintain their choke
hold on Main Street's vitals. The big banks that have caused our
economic crisis by severely abusing their privilege to create money
were treated with kid gloves.
Now, the Republican leader said that the bill was like a nuclear
weapon aimed at an ant. I say, the bill was a cotton ball thrown at an
elephant. The bill does not even create real competition to the handful
of big banks that have simply become too big and controlling.
Indeed, the bill allows them to keep their vaulted positions with a
few modifications to their business practices. It will take years for
regulators to sort out and apply, if ever, the mild provisions in the
bill. And there are so many loopholes you could read the bill for
another year to find them all. A Consumer Financial Protection Bureau
at the Federal Reserve cannot compensate for a banking system that is,
at its heart, terribly misformed. Time will prove this view correct.
A handful of big banks--Goldman Sachs, JPMorgan, Bank of America,
Citicorp, Wells Fargo, HSBC and Morgan Stanley--have so harmed the vast
majority of other financial institutions on Main Street that these
smaller institutions, which comprise the majority that are still left,
are being penalized big time by having to pay exorbitant additional
insurance fund fees to the regulators to prop up the losses of the big
banks that have so harmed the whole financial architecture of our
country. That's why lending remains seized up coast to coast. It's why
over 84 more banks have folded this year. And while this is happening
for the remains that are left, then the big six go in and gobble up
what's there.
The bill basically grandfathers the too big to fail big banks that
have grown even more unwieldy as the financial crisis has deepened.
Today they have been rewarded because they're even growing bigger.
Before the crisis, they controlled one-third of the assets of this
country. Astoundingly, they now control two-thirds of the assets of our
Nation. Can you imagine a handful of banks with that much power? The
bill does absolutely nothing about that. It kind of looks the other
way. One cannot call this structure free market competition. One has to
call it oligopolistic control of our financial marketplace.
If you're feeling the pain because you lost your home or you're about
to lose your home or you lost your job or you lost some of your pension
or you lost some of your IRA, you know who to blame. Their bad behavior
has hurt all the other banks in this country and, in fact, other
nations and people around the world. For shame.
But as a result of their concentration of power in the hands of far
too few, it is expected that 20 million American families will lose
their homes, 2.4 million more Americans this year. Unemployment rates
remain stuck too high, and our economy is not producing the jobs it
should because lending has seized up across this Nation. People are
losing more equity and their savings, yet Goldman Sachs, JPMorgan,
Citigroup, Bank of America, Morgan Stanley, Wells Fargo, HSBC, they're
doing just fine, making billions and billions in profits and taking
bigger and bigger bonuses to boot.
[[Page H5283]]
This bill didn't even recoup those bonuses to help pay for the cost
of housing modifications for Americans who stand to lose their most
important asset this year, their equity.
The arrogant power of the big banks is demonstrated by their
interconnectedness, when you saw Goldman Sachs and AIG kind of bail one
another out. And it's a perfect example of why too big to fail is too
big to exist. They are very clever, and they command inordinate power,
so much market power that they ignore the laws for themselves when it
is convenient.
Banks are doing more than just banking. In fact, they are speculating
with our money. They just can't help themselves. They take a dollar and
turn it into a hundred or more.
The SPEAKER pro tempore. The time of the gentlewoman from Ohio has
expired.
Ms. KAPTUR. Mr. Speaker, I will place the other remarks in the Record
tonight. And I might say that it's not a question of if the system will
fail again, but only when it will fail again.
This used to not be allowed under the Glass-Steagall, which
prohibited commercial banks from doing investment activities and
investment firms from taking deposits. The two were kept separate.
However, in 1999, the Graham-Leach-Bliley bill repealed Glass-
Steagall and the walls came down between commercial banking and
speculating.
Gambling and prudent lending need to be separate again. I have
introduced H.R. 4377, the Return to Prudent Lending Banking Act which
strengthens the Glass-Steagall separations and repeals some of what
Graham-Leach-Bliley did.
We know instinctually that we need to break up the big banks and
increase competition across our financial system.
Instead, the megabanks stay too big to fail, and the American
taxpayers will pick up the tab when they implode the economy at some
date in the future. That is their pattern. That is their history.
This bill took far too many passes.
Regulating derivatives is an excellent example of Congress knowing
what we need to do but not doing it.
Regulating all derivatives openly and clearly should be expected with
no exceptions. Nothing less is acceptable.
In this bill, JP Morgan, Goldman Sachs, Morgan Stanley, Bank of
America, Wells Fargo, Citigroup, and their colleagues can continue to
trade derivatives that are used to specifically hedge the risk that
they are undertaking, as well as still being able to trade interest-
rate and foreign-exchange swaps.
Last week Bloomberg Businessweek stated the following: ``U.S.
commercial banks held derivatives with the notional value of $216.5
trillion in the first quarter, of which 92 percent were interest-rate
or foreign-exchange derivatives, according to the Office of the
Comptroller of the Currency.''
So, they can keep the vast majority of business in house.
Bloomberg Businessweek also reported that ``The [same] five U.S.
banks with the biggest holdings of derivatives--JP Morgan Chase,
Goldman Sachs, Bank of America, Citigroup, and Wells Fargo--hold $209
trillion, or 97 percent of the total, the OCC said.''
So, let's review: 5 megabanks, all ``too big to fail'', highly
interconnected, hold \2/3\ of the assets of people in our country. They
have concentrated vast amounts of financial power amongst themselves
and also control 97 percent of the derivatives in the country. Now
that's a recipe for more abuse. And that set of facts is a window on
future abuse.
Perhaps worst of all, according to such experts as William Isaac,
former Chair of the FDIC and Henry Blodget, editor-in-chief of The
Business Insider, concur that ``reform'' bill would not have prevented
the crisis of 2008. So, why didn't Congress assure that it did?
Now, some might say we can't predict what the next financial crisis
will look like. But we should be able to put reforms into place that
would have prevented the crisis we just went through. But Congress did
not. The wine glasses and cigars are surely full and lit tonight.
Sadly, this House repeated its history in weak financial regulation.
We did not make the hard choices. It left the American people
vulnerable again. It is not a question of ``if,'' but only ``when.''
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