Tim's Work on Banking-related Issues
Senator Tim Johnson (D-SD), Chairman of the Senate Committee on Banking, Housing and Urban Affairs and member of the committee since 1997, has a long career as a fair-minded legislator focusing on public policies ensuring the safety and soundness of our nation’s financial system. As international markets and technology have changed, he has supported efforts to modernize our regulatory system and make the regulatory framework more effective for regulators and consumers.
South Dakota is home to many community banks, which is why Johnson is often viewed as a community banking advocate. Johnson has said, “In my home state of South Dakota, community banks are the lifeline of many small, rural communities.”
Johnson’s most notable accomplishment on the Senate Banking Committee is the passage of the Safe and Fair Deposit Insurance Act of 2005. Recognizing that the federal deposit insurance system had not been updated since 1980, Johnson was an early champion of deposit insurance reform. Johnson's bill gave the FDIC critical authority to charge banks based on risk; to build up additional capital buffers in strong economic times; to protect retirement accounts up to $250,000; and to ensure that ordinary coverage limits keep pace with inflation. Johnson's legislation was put in place at the right time, and has allowed the FDIC to keep Americans' bank deposits safe despite the turbulent economic crisis.
Johnson has been a leading proponent of strengthening the separation between banking and commerce to ensure that consumers have more and improved credit and financing options. In 1999, he successfully amended Gramm-Leach-Bliley legislation to close the unitary thrift loophole. Beginning in 2005, Johnson led the fight to keep Wal-Mart Stores Inc. from buying an industrial loan bank in Utah and close the ILC loophole. Johnson believes that maintaining the separation between banking and commerce is important to the safety, soundness and competitiveness of our nation’s banking system.
Following September 11, 2001, shipments of check payments across the country were delayed, opening up possibilities for processing errors, fraud and other risks to the financial system. Senator Johnson successfully led legislation known as Check 21 through Congress, facilitating banks’ ability to exchange checks electronically. This was a significant step to improve the nation’s check payment system and ensure the financial stability of our system in the event of another attack.
Johnson has also been an advocate for retirement security, better disclosure of consumer credit product terms and personal credit information, better access to financial literacy education, and other important consumer protections like the FACT Act and the Identity Theft Penalty Enhancement Act. In 2002, Johnson was one of nine Senators to negotiate the final Sarbanes-Oxley legislation reforming corporate governance laws and protecting millions of Americans’ hard-earned retirement savings from irresponsible corporate actions.
Senator Johnson has spent much of his career working to address the unique needs of consumers in rural and Native American communities—areas traditionally underserved by financial institutions. Johnson has been a champion for rural housing needs, the author of the Native American Housing and Self-Determination Act (NAHASDA), and a lead advocate for the Native-American Set-aside within the Community Development Financial Institutions (CDFI) program.
Continuing his efforts for better regulation, in 2006, Johnson and Senator John Sununu (R-NH) began their call for insurance industry regulatory modernization when they introduced a bill to create an optional federal charter (OFC) for insurance regulation. Johnson remains concerned that the state-by state regulatory system is outdated, inefficient, and bad for consumers and is committed to reforming the regulation of this sector.
Johnson played an important role in the passage of Housing and Economic Recovery Act (HERA), GSE reform, the Fraud Enforcement and Recovery Act and other legislation addressing the economic crisis. Johnson voted against the Emergency Economic Stabilization Act (EESA), citing the lack of protections for the taxpayer and the lack of accountability for those financial institutions receiving TARP funds. Johnson has also been a strong voice calling for increased accountability, responsibility and transparency at the corporations that contributed to the current crisis.
The turbulent economic events of the past few years have made it clear that serious changes to our financial services regulatory structure were needed. As a member of the Senate Banking Committee and the House-Senate Conference Committee, Johnson provided a balanced perspective during consideration of the Dodd-Frank Wall Street Reform and Consumer Protection Act. He worked hard to identify the causes of the crisis and find the right solutions to address them.
Johnson supported the creation of a mechanism to monitor systemic risk in the financial sector, as well as the creation of a new structure to regulate risky derivatives, credit default swaps and other complicated financial products that were not transparent and had previously gone unregulated. As well, he supported efforts to provide consumers with better rules governing the products they use and better information about those products by creating a consumer watchdog agency. Importantly, Johnson also supported provisions to unwind large financial firms without having to bail them out. Senator Johnson pushed for legislation that provided common sense solutions to ensure that small banks and small businesses continued to create jobs and provide consumer credit. Furthermore, Johnson led efforts to find compromises on controversial issues, including federal preemption and fiduciary duty.
Johnson continues to be committed to working with the White House, his Senate colleagues, consumer groups and industry to find mutual understanding and common sense solutions for consumers and our financial services industry.
Senator Johnson was re-elected to his third Senate term in 2008. He was elected to the U.S. House of Representatives in 1986.