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Friday, June 25, 2010

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CONFERENCE COMMITTEE FINISHES WORK ON WALL STREET REFORM

Peters Secures Key Provisions; Final Vote on Historic Legislation to Protect Economy and Taxpayers from Wall Street Greed Likely Next Week

(Washington, DC) – U.S. Representative Gary Peters and other members of the House-Senate conference committee completed work on historic Wall Street reform legislation early this morning.  The reform would crack down on Wall Street greed and the reckless investment practices that led to a global financial crisis and caused the economic downturn from which the nation has yet to fully recover.  The reform would protect the economy from future meltdowns and ensure an end to taxpayer bailouts of financial institutions.

It is rare for a Member in his first term to be selected to a conference committee, especially on such a historic and high priority issue.  Rep. Peters served as a local branch manager and financial advisor for two investment firms where he helped families invest for retirement, their children’s education and other financial needs for 22 years.  Peters was selected to serve on the committee for his extensive experience and expertise on financial issues and his leadership in crafting the reform bill that passed the House last December. 

“Nearly two years after casino-style Wall Street investments almost caused a second Great Depression, Congress is finally nearing completion of reform to hold Wall Street accountable and prevent future crises,” said Peters.  “Wall Street greed and recklessness rippled across the country.  The crisis hurt small businesses, cost us jobs and decimated retirement accounts and home values, and then the perpetrators received a bailout and giant bonuses.  This reform will crack down on Wall Street to protect the economy and small businesses, safeguard retirement savings and home values, defend consumers against predatory lending practices and stop taxpayer bailouts once and for all.”

Peters successfully fought for many key provisions included in the final Wall Street reform legislation including provisions to protect and empower shareholders, a company’s true owners.  For example, most provisions of the Peters-authored Shareholder Empowerment Act (H.R. 2861) were included in the final legislation.  These measures will give investors greater ability to ensure that executives act in shareholders’ long-term interest rather than making irresponsible bets for their own short-term gain, the sort of reckless investing that led to the financial crisis.  Peters’ bill would also give shareholders a stronger voice in overseeing the companies they own by making common sense changes to corporate election rules and executive compensation approval processes. 

“Individual shareholders on Main Street are a public company’s true owners,” said Peters.  “Shareholders need to have a say on executive pay and the ability to recapture undeserved bonuses.  We also need to ensure that companies are run soundly with shareholders’ long-term interest in mind rather than having Wall Street traders gambling with people’s retirement accounts and savings.”

Peters also successfully added an amendment to help ensure the bill did not overreach and hurt non-Wall Street businesses.  The original House and Senate bills contained an exemption on new derivatives regulations for companies who use derivatives in a legitimate way to hedge their exposure to fluctuating costs of energy or raw materials.  Peters’ amendment would extend this protection to manufacturers' captive finance companies if they are hedging an actual business risk associated with interest rate or currency fluctuations.  New regulations would have cost Ford and Ford Credit alone $2.5 billion over the next five years.  Peters’ amendment saves Ford and other manufacturers from taking a financial hit that affected their ability to create jobs.

Last year Peters authored the amendment that passed as part of the original House bill that would force giant Wall Street banks to pay back every penny of the bailout initiated in 2008 shortly before the people of Oakland County sent Peters to Congress in 2009.  Peters fought vehemently to have this provision included in the final bill but Senate negotiators voted to reject the provision.  However, the conference committee did approve the use of the same mechanism Peters proposed for recouping the bailout to collect revenue from large financial institutions to help offset the cost of shutting down failing firms in the future.  Peters will continue to pursue other means for requiring Wall Street institutions to pay back taxpayer for any shortfall in the TARP.

“I will not stop fighting until Wall Street institutions pay back every penny of the taxpayer bailout,” Peters said.  “It is only fair that the people who created the mess are held accountable and give taxpayers their money back.  Far too often common sense does not prevail in Washington, but we can’t and won’t give up.”

The final Wall Street reform legislation expected to be voted on next week would:

• Create tough protections for the economy against the reckless investments on Wall Street and rein in the casino-style investments that led to 2008 financial meltdown, including new rules for derivatives and mortgage-backed securities,
   
• Stop all future taxpayer bailouts by dismantling giant financial institutions and force large institutions themselves to pay for the dissolution of troubled firms,
   
• Empower shareholders, a company’s true owners, to have more say in how their company is run (including having input on pay and bonuses, more power in corporate board elections and the ability to help rein in reckless investing),
   
• Develop tough new protections for consumers using financial products such as a car loan, student loan or mortgage, including cracking down on the predatory mortgage lending that helped create the housing bubble.  This section also cracks down on individuals who attempt to fraudulently obtain mortgages they can’t afford.

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