Congressman Bill Pascrell

Representing the 9th District of NEW JERSEY

Republican Opposition To Financial Reform Legislation Is Bankrupt

May 21, 2010

A few Republicans in Congress have offered various alternatives to financial reform legislation. Most of their rhetoric about fixing the Wall Street collapse is factually bankrupt.

In December, I voted with the House majority for the comprehensive Wall Street Reform and Consumer Protection Act (H.R. 4173), which is now being debated in the U.S. Senate. The bill is aimed at making the necessary changes to our financial system after eight years of very little transparency and accountability. The results were the great recession and job losses of record proportions.

Congressional Republicans, including Rep. Scott Garrett (R-5th Dist.) in a recent opinion piece on this site, say they don’t like government bailouts for banks. Neither do I. The bill I support requires the banks, not the taxpayers, to make amends. In fact, the Senate version of the bill now explicitly states that no taxpayer funds can be used for bank bailouts. Case closed.

The alternative legislation supported by Garrett leaves it to the banks to, in his words, "take appropriate steps to manage their own risk." That kind of "reform" is no reform at all. I prefer not to leave consumers at the mercy of Wall Street. The hen house was raided too many times during the last administration and no one did anything about it. By September 2008, it was too late.

Because the nation’s latest financial crisis was marked by a demonstrable need for government oversight in financial services, it is common sense to support the creation of the Consumers Financial Protection Agency, a provision of the financial reform bill. One of the first goals of this new consumer protection agency will be to require full disclosure of the terms of financial products, making them as clear as a nutrition facts label on a box of cereal.

Consumers will always be ultimately responsible for the contracts and agreements they enter. But with government oversight, consumers will be able to participate in a market where their decisions can be based on facts rather than perception, deception or outright financial delusion.

The idea that establishing a consumer protection agency will interfere with consumers’ choices of credit cards, mortgages or financial services is laughable. As Elizabeth Warren, Harvard law professor and chairwoman of the Congressional Oversight Panel, has pointed out, no consumer chose to be a victim of the traps buried deep within the fine print of a subprime mortgage and bad credit card agreements.

The bill will not result in any more government "scrutiny" of local businesses that accept credit cards than they already face under the Truth in Lending Act laws passed in 1968. The fact is, most of the dentists, plumbers, butchers and other small businesses Garrett is so worried about are already exempt from these laws.

Thanks to congressional action, including the Recovery Act, and the gumption of hardworking Americans that have been weathering this financial crisis, we have turned a corner in this economy. Nearly 300,000 jobs were created last month — a far cry from the days when the American economy was hemorrhaging twice that amount every month. Now it’s time to apply the lessons we have learned from our recent recession.

The real financial reform legislation that I support will protect consumers. But it could also put the titans of Wall Street on a more solid foundation. Imagine, profits earned through providing reliable services and credible advice to customers. That’s an idea both sides of the aisle should be able to support.