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Wall Street Reform Passed by Senate Includes Two Key Klobuchar Amendments on Predatory Lending and Minnesota's Federal Reserve

May 20, 2010

Washington, D.C. – U.S. Senator Amy Klobuchar today voted to pass the Wall Street reform bill, legislation to restrain the reckless, irresponsible practices of Wall Street that led to the economic collapse of 2007.  Two Klobuchar amendments included in the bill aimed at protecting the interests of Main Street were included in the final Senate bill that passed 59-39 today. 

“The reckless gambling on Wall Street cost millions of Americans their jobs, homes, and nest eggs,” said Klobuchar. “Trillions of dollars in wealth were gambled away because of a financial system that lacked the necessary safeguards to protect Main Street. This bill establishes safeguards to protect our economy and will help bring accountability back to our financial system.”

During floor consideration of the bill, the Senate passed an amendment Klobuchar introduced with Senator Kay Bailey Hutchison (R-TX) that maintained the Regional Federal Reserves’ supervisory role over community banks.  The amendment, which passed by a vote of 90-9, was supported by the Independent Community Bankers of America. Without the amendment, Minnesota’s Federal Reserve would have gone from supervising 600 banks to supervising one.

“The regional Federal Reserve bank system is a two-way street giving a voice to our community banks,” Klobuchar said. “This amendment ensures the institution overseeing our nation’s monetary policy is connected to Main Street.”

Another amendment authored by Klobuchar and Senator Jeff Merkley (D-OR) will protect consumers from predatory lending practices passed the Senate by a vote of 63-36.  The amendment, modeled after a successful Minnesota law, will ban mortgage lenders and loan originators from accepting payments based on the interest rate or other terms of the loans.  In addition, it will require lenders to document income and other underwriting standards to ensure that borrowers can repay their loans – effectively ending the deceptive practice of “liar loans.”

“Complex and deceitful predatory lending practices were at the heart of the financial crisis,” Klobuchar said.  “Everyday Americans must be able to obtain loans while avoiding unnecessary risk if we are to restore our economy.”

The Wall Street reform bill now moves to a conference committee with the House.

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