March 30, 2011
House Republicans Must End Ambush on Wall Street Reform
Statement of Bartlett Naylor, Public Citizen Financial Policy Advocate
As America recovers from the wreckage wrought by the Wall Street collapse, House Republicans must stop their ambush on the new reform law intended to prevent another such disaster. In another attack on financial reform, the House Financial Services Committee’s subcommittee on Oversight and Investigations will hold a hearing today called, “The Costs of Implementing the Dodd-Frank Act: Budgetary and Economic.”
We hope the committee will realize that the real effect of Dodd-Frank will be to make it harder for Wall Street to pilfer Main Street.
The hearing will include a focus on the Commodity Futures Trading Commission (CFTC), but Chairman Gary Gensler was not invited to testify.
A little-known agency, the CFTC is charged with regulating the complex financial instruments that figured in the core of the financial meltdown of 2008. One key example of the necessary role of the CFTC ironically deals with the damage caused by one of the largest employers in House Speaker John Boehner’s (R-Ohio) district: Procter & Gamble. P&G claimed it was sold products it didn’t understand and lost $157 million. P&G successfully sued Bankers Trust, which it claimed misled the consumer products maker. Well-publicized litigation shed light on a market begging for reform.
A horrific recession later, where not only P&G has lost millions, but America has lost 20 million jobs and more than $10 trillion in savings owing to weak CFTC rules and other faults in regulation, the Republicans are ambushing Wall Street reform.
So what is the cost of Dodd-Frank on the American economy? A better question is, What are the benefits? We hope it will be the inability of Wall Street to wreak havoc on Main Street companies such the largest employer in Speaker Boehner’s district. Whether it delivers on its promise depends in no small part on whether Republicans undermine it before it is implemented.
As members of the committee receive the testimony of witnesses, here is additional background information on certain witnesses.
• Dr. Douglas Holtz-Eakin, president, American Action Forum. AAF was founded in February 2010 to “lead the policy debate and will seek the input of center-right leaders who understand that government has an important, but limited role in protecting our freedoms, promoting the free-market, and helping our citizens,” according to its website. AAF is a conservative think tank; its sister organization, American Action Network, spent about $21 million in the 2010 elections.
• Dr. James J. Angel, associate professor of finance, McDonough School of Business, Georgetown University. Angel “worked at BARRA (now part of Morgan Stanley) where he developed equity risk models. He currently serves on the boards of directors of the DirectEdge stock exchanges,” according to Georgetown’s website. In December, Angel told the Senate banking committee that “We need to hire enough good people to do the job right, and make sure they have the right tools to do the job. We also need to be able to pay them enough to attract and keep good people. The pay level of SEC officials is very far below their private sector counterparts. SEC salaries should be benchmarked close enough to the private sector so that they can get the right people.” In his prepared remarks for this hearing, Dr. Angel focuses on misspent money at the SEC.
• Dr. James A. Overdahl, vice president, NERA Economic Consulting. Overdahl also is spokesperson for the Principal Traders Group, which represents high-frequency traders.
Public Citizen is a national, nonprofit consumer advocacy organization based in Washington, D.C. For more information, please visit www.citizen.org.