Reforming the Way Wall Street Does Business

This week I went to the Senate Floor to talk about an issue that I care deeply about and that I have fought for all my life. We have an opportunity to pass real financial reform that puts in place the strongest consumer financial protections and ensures the greed of Wall Street doesn't trump the needs of Main Street. We need to put government back on the side of the middle class and protect them from fraud, duplicity, and gouging.
 
I support the Wall Street Reform Bill because all my life, I have been a reformer. I have a deep suspicion of how big banks treat the little people and what they do with the little people's money. Time and time again we have seen the consequences of loose regulations and wimpy enforcement. Time and time again, I voted for more teeth and better regulation. I have always made sure I was on the side of consumers and Main Street and against unfair and abusive practices on Wall Street.
 
I am not a Janey Come Lately on this issue. Years ago, when the African American community in Baltimore had no access to credit, community members would be targeted by Happy Harry. And why was Harry Happy? Because he charged 18 to 20 percent interest for a loan and knew his customers had nowhere else to turn. So I worked with the Parish Council at St. Gregory's Church to establish a credit union so that there would be access and to end the scamming, the scheming, and the gouging.

As a Senator, I continued these fights. A decade ago, the Senate passed legislation that I believe led us down the path to where we are today. A law was enacted that brought down the necessary protective firewalls in U.S. financial services. I was one of eight Senators to stand up on the side of consumers and oppose that bill.
 
When the bill was being debated on the floor, I expressed my concerns that the free market had brought us financial institutions that were "too big to fail." I warned that relaxing the laws about who can own and operate financial institutions would result in an unhealthy concentration of financial resources and I demanded that any financial reforms expand consumer protections and community investment policies.
 
This is one time that I am not happy to say I told you so. While others might say trust, I say verify. That is why we need the strongest possible regulation.
 
The Wall Street Reform Bill will go further than any other proposal to end the kind of recklessness and greed on Wall Street that led to 8 million Americans losing their jobs. It bans bailouts, closes loopholes, protects small businesses and prevents Wall Street from gambling with Americans' retirement funds. It also brings transparency to the shadowy, unregulated $600 trillion derivatives market for the first time.
 
We need to hold Wall Street accountable. We need to end taxpayer bailouts. We need to force them to clean up their own mess. We need to ensure that when banks take risks with our money, it is done in the open and on fully transparent exchanges. If we have a Consumer Product Safety Commission to protect children from toxic toys, we need a strong regulatory framework to protect consumers from toxic assets.

This bill will provide a 21st century regulatory framework for the financial system. No more scamming and scheming. No more preying on hardworking American families with shady lending practices. If you break the law, you will suffer the consequences. And if you work hard and play by the rules, you will have expanded opportunities for you and your family.

Wall Street Terms - In Plain English

Derivative - A financial contract that derives its value from an underlying product or security, the investor does not actually own the underlying asset). The value depends on the price of a commodity, interest rates, the price of a stock, or the risk that a borrower will default on a loan.

Futures Contract - An agreement to buy or sell a commodity or financial instruament in a designated future month at a price agreed upon at inception by the buyer and seller.

Securitization - The process through which an issuer creates a financial instrument by combining other financial assets and then selling them to investors. Mortgage backed securities are an example of this. An insurer combines mortgages into one large pool, divides the pool into smaller pieces, and then sell those pieces to investors.

'Volcker Rule' - Limits what commercial banks can do with their deposits by preventing them from owning a division that makes speculative bets. The rule also calls for limits on the size of financial firms.