Draft Bill Guts Much-Needed Wall Street Reforms
Statement of Bartlett Naylor, Financial Policy Advocate, Public Citizen’s Congress Watch Division
Note: Today, U.S. Senate Committee on Banking, Housing, and Urban Affairs Chair Richard Shelby (R-Ala.) released a discussion draft of a bill intended for a committee vote next week. The 216-page draft contains 83 sections changing current banking law.
Chairman Shelby proposes major changes that threaten to undermine the already fragile Wall Street reforms intended to prevent another 2008 financial crisis.
The Shelby bill raises the threshold for close supervision of banks from $50 billion to $500 billion. America’s experience with the failure of large financial institutions has been disastrous. Removing safeguards that now apply constitutes a gamble that the nation can ill afford to lose.
The measure also eliminates the Volcker rule prohibition on gambling with taxpayer-backed FDIC deposits for any bank with less than $10 billion in assets. That’s simply an invitation for hedge funds to obtain a bank charter.
The chairman’s draft subjects all the new Dodd-Frank reform rules to a regulatory review process designed to identify and repeal outdated rules. New rules for Wall Street have no place in a review process that is supposed to target old rules. This is nothing more than a thinly veiled and cynical attempt to gut Wall Street reforms under the radar.
The draft legislation also contains a number of other proposed changes that we are continuing to examine.
We urge committee members to remain committed to fundamental Wall Street reform. Any changes should be authored not by industry trade associations, but Americans who are part of the real economy that Wall Street should be serving.