[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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