Financial Experts and Civil Rights Leaders Detail Expectations for the Congressional Conference on Financial Reform Bill

Today, a panel of financial experts and civil rights leaders from the Americans for Financial Reform coalition held a press conference call to discuss what’s to come for the historic financial reform bill as Congress moves to conference next week.  Though the current versions of the bill are good, the speakers stressed the need for Congress to preserve protections for consumers and prevent loopholes and attempts to weaken the legislation to create the strongest bill possible.

Experts Elizabeth Warren, the Leo Gottlieb Professor of Law at Harvard University and leading consumer advocate; Damon Silvers, director of policy and special counsel for the AFL-CIO; Cristina Martin Firvida, director of financial security at AARP; and Nancy Zirkin, executive vice president of The Leadership Conference on Civil and Human Rights, detailed priorities in the House and Senate bills to ensure the strongest final bill possible for the financial security of working American families.

Some of the priorities laid out by the coalition were:

• Establishing a Consumer Financial Protection Bureau that is independent, has broad enforcement authority, and the necessary funding to protect consumers.  There should be no carve-outs or exceptions for car dealers or other special interest groups.


• Ending the “Casino Economy” and shining a light on the shadowy derivatives market, by creating new rules for this $600 trillion market that would require that banks’ bets be backed by capital.  Congress must also ensure that the new regulations not be undermined by exemptions or enforcement gaps.


• Regulating Corporate Governance to hold companies and CEOs accountable for risky decisions that negatively affect the financial security of millions of Americans. The financial reform bill should empower shareholders to have a real voice in choosing candidates for company boards of directors, and it should require shareholder votes on executive pay at big banks.


• Ensuring comprehensive regulation of leveraged investment fund managers such as hedge funds, leveraged buyouts, and venture capital funds which now operate almost entirely without public oversight.   Stronger House language is needed in conference to change this. 


• Addressing Systemic Risk by separating risky and speculative activities from the basic commercial banking business of making loans to consumers and businesses, through a strengthened Volcker rule and rules like the Merkley-Levin amendment that require derivatives trading to be separated from insured deposits.  Congress must also move to require that banks and speculators – not taxpayers – pay the costs when financial institutions fail.


• Protecting investors by requiring all investment advisors to put their clients’ interest first.  Without the changes in the House bill, brokers and insurance agents will be able to present themselves as advisors, but recommend products that they know are not in their customers’ best interests in order to turn a profit.


• Reforming Bad Mortgage Lending Practices by creating strong, enforceable standards for home lending to protect American families’ largest investments – their homes – and to prevent lending abuses. Congress must also include provisions to protect families from losing their homes to foreclosure.


• Taking on conflicts of interest and holding credit rating agencies accountable for stamping AAA seals of approval on what were actually enormously risky products. Congress should grant the Securities and Exchange Commission (SEC) the authority it needs to hold credit rating agencies accountable, and insulate the agencies from industry pressure to loosen standards with the “Franken Amendment” language.


• Reforming Federal Reserve governance and increasing transparency by barring member banks from voting for regional Fed directors, giving the President and the Senate the right to select the powerful New York Fed president, and mandating audits of the Fed.

As Congress moves to conference the House and Senate versions of the Restoring American Financial Stability Act next week, the civil rights, labor, and consumer advocacy communities will be urging congressional conferees to adopt these provisions and create the strongest, most robust legislation possible to protect the savings and assets of ordinary working Americans.