Robert Menendez

Senator Menendez helped lead the fight to enact the new Wall Street Reform Law, which cracks down on the big Wall Street banks and mortgage lenders that gambled with families’ money and caused the financial crisis that devastated both their jobs and retirement accounts.  As a member of the Senate Banking, Housing and Urban Affairs Committee, Senator Menendez has worked to ensure that our financial system is both strong and fair for consumers. 

The Dodd-Frank Wall Street Reform and Consumer Protection Act creates common sense accountability rules for Wall Street that will reduce the need for big bank bailouts, stop Wall Street’s risky behavior to prevent another economic meltdown, and establish strong new consumer protections through the Consumer Financial Protection Bureau.  As a result of this landmark bill, accountability is coming back to Wall Street, which means that greater economic security is coming to Main Street.

Highlights of the Wall Street Reform Law

• Establishes the Consumer Financial Protection Bureau (CFPB).  The CFPB will have the sole job of protecting American consumers from fraud and abuse and ensuring consumers receive the clear information they need on loans and other financial products from credit card companies, banks, and student lenders.  The CFPB will streamline and consolidate existing consumer protection responsibility in one office – actually reducing the size of government in the process – that will have strong investigative authority to react to consumer abuses as they occur. 

• Regulates Complex Financial Products.  This bill will finally regulate the previously unregulated derivatives market, which is estimated to be greater than $600 trillion dollars.  Most derivatives contracts will be traded on public exchanges to increase transparency and reduce risk.  Most Wall Street firms will also be required to put their derivatives trading into separate companies to reduce risk.  As we unfortunately saw with AIG, unregulated derivatives can devastate our economy.  This accountability and transparency is a key part of financial reform.

• Ends Bailouts.  Taxpayers will no longer be asked to write a check to bail out banks and other large companies that threaten the economy.  By requiring banks to hold more money, creating new rules to liquidate failing companies, and establishing an early warning system for risky financial companies, we will greatly reduce the risk of taxpayer bailouts.
  

Senator Menendez wrote or was an advocate of the following reforms in the Wall Street Reform Law:

• “Honest Broker Law”.  Stockbrokers and many other providers of investment advice are not required to act in the best interest of their customers, and often sell products that earn higher fees for the broker even though they’re worse for the customer.  He fought hard to give regulators the authority to enact rules requiring brokers to act in the best interests of their customers. 
  

• Say on Pay.  Shareholders will now have the right to vote on the executive pay policies of companies.
  

• Credit Score Notification.  Consumers will now be notified of their credit score when they do not get a loan because of that credit score.
  

• Whistleblower Protections.  Wrote a provision expanding protections against employer retaliation to those whistleblowers employed by subsidiaries and affiliates of companies.  This expansion allows for greater job security for those who can blow the whistle on foul play.
  

• Expanding Financial Education.  Wrote a provision that creates a permanent Financial Education and Counseling Program at the Treasury Department’s Community Development Financial Institutions (CDFI) Fund.  That program awards grants to community groups that provide financial education for consumers.  He has long supported empowering consumers to fully understand the often complicated economic decisions that go into home mortgages and other financial matters.
  

• Creating Local Jobs.  Analysts estimated that the changes he wrote to municipal bond ratings could save towns billions of dollars in bond costs so they can finance local job-creating projects.
  

• Transparency in Derivatives.  All trades, both cleared and uncleared, will now be required to be reported to repositories that can store and analyze the information.  This will increase transparency in the risky derivatives market.
  

• Avoiding Risk.  Financial regulators will now be required to produce regular reports on how they are using capital and liquidity standards to avoid systemic risk.  These two important measures of company health were often overlooked during the financial crisis of 2008.
  

• Company Disclosure of CEO-to-Average Worker Pay Ratio.  Wrote a provision to require publicly-listed companies to disclose the amount of CEO pay, median company worker pay, and the ratio of the two.  This disclosure to investors shines light on the gaping pay disparities between corporate executives and average workers.
  

• Offices of Women and Minority Inclusion at Federal Banking Agencies.  Offices of Women and Minority Inclusion are established at all the major financial regulatory agencies (Treasury Department, FDIC, SEC, etc.) and will be responsible for all matters of diversity in both agency employment and contracting.  The offices are increasing the opportunities available for traditionally underserved communities within the banking industry.
  

• Banning Steering Payments to Mortgage Originators.  During the height of the subprime loan crisis, mortgage originators received payments (often not disclosed to consumers) to steer consumers into risky subprime mortgages that were far more expensive for consumers.
  

• Disclosure of Remittance Fees.  When consumers send money abroad, often to families in need, they are sometimes charged hidden service fees. Senator Menendez successfully advocated for a provision that requires upfront disclosure of fees that will be charged when consumers send money abroad so consumers can decide for themselves whether to use that service.
  

• Uncovering Hidden Company Debts.  Lehman Brothers and other companies failed in part because they hid risky debts that weren’t listed on their balance sheets.  This provision will empower regulators to take all off-balance sheet activities into account when calculating how much money banks have to hold to protect against risk.
  

• Taking Back the Salaries of Executives When There Is Corporate Wrongdoing. Regulators are now authorized to take back compensation that was mistakenly awarded to company executives based on bad accounting.
  

Additional Information on the Wall Street Reform Law:

• Summary of Wall Street Reform Law
• Wall Street Reform Myths v. Facts
• Read the Legislative Text of the Wall Street Reform Law