Nearly two years after the reckless behavior of the Big Banks took our economy to the edge of the abyss and cost 8 million Americans their jobs, Congress has passed and sent to the President the most significant legislation to rein in Wall Street and the Big Banks since the Great Depression. These reforms will bring transparency and accountability to Wall Street, and protect consumers on Main Street.
The big lesson is that if we organize, we can win. The progress we made was because people raised our voices, took the message to the public, to the streets, and to the Halls of Congress, where we were joined in our efforts by some committed elected representatives.
The forces arrayed against us had overwhelming resources, and hundreds of billions of dollars at stake in protecting the status quo. But we proved that when we fight back, and stand together, we can win victories against even the biggest and best-funded opponents of change. The big banks spent $1.4 million dollars a day lobbying to kill reform and they did not succeed.
We didn't win every battle, and there is still far more work to be done. This is the beginning not the end of the fight to restore the rightful place of the financial system as the servant, not the master, of the real economy. The Big Banks, and their high priced lobbyists, will continue to work to weaken or gut reforms as this bill becomes law and the regulatory agencies begin to try to implement it. We need to stay vigilant and active to make sure the implementation of the law fulfills its promise, on appointments, and on areas not addressed, or that need to be more forcefully addressed, including the continuing foreclosure crisis, too big to fail and the financial speculation tax, among others.
But the legislation headed to the President's desk is a better start than almost anyone predicted was possible in the face of the powerful opposition and entrenched power of the status quo. We won. Now let's get back to work.
Some of the highlights of the bill are:
Landmark consumer protection: Consumers will now have an independent advocate on their side to prevent tricks and traps related to mortgages, payday loans and checking accounts. Credit cards and mortgages will offer terms in language we can all understand. It will also offer help for those abused by predatory lenders and limit banks from charging businesses hefty fees for debit-card purchases.
Shining Light on Shadow Markets: The $600 trillion derivatives market will now operate in the open, so regulators can catch problems - like the credit default swaps that brought down the economy - before they happen. Most deals will have to be backed up by clearinghouses and traded on public exchanges. The participants will have to actually prove they have the money to cover their bets. In addition, hedge funds and private equity funds will have to register with the SEC and have regulators watching over them.
Preventing taxpayer bailouts: The government will have the authority to step in and safely shut down any failing financial firm, not just banks, instead of propping them up with taxpayer money. One regulator will be in charge of watching for emerging threats to the whole financial system - and will have the tools and authority to ensure those threats are actually visible.
Reining in the Wall Street Casino: Banks will be barred from gambling for their own account with your money. Banks will have to separate some of their derivatives trading operations into affiliates.
Mortgage reforms: For the first time lenders are prohibited from making loans that borrowers cannot repay, and banned from receiving kickbacks for steering people into high rate loans when they qualify for lower rates. Consumers are protected from abusive loan fees and penalties for prepaying.
Strong investor protections and more corporate accountability: Shareholders will have new tools to hold corporate boards and management accountable, including a voice on executive compensation decisions and an enhanced ability to nominate and elect corporate directors. Brokers will have to act in the best interests of their customers.
Holding Credit Rating Agencies Accountable: Credit rating agencies will no longer have a vested financial interest in giving high ratings to risky investments. Better controls will hold rating agencies accountable for the reliability of their reporting. Investors will be able to sue credit rating agencies who slap a high rating on a risky investment.
Opens the Fed's books: The Fed's emergency lending programs from the financial crisis will be audited to see where the money went. The Fed will also have to disclose loans it makes to banks through its discount window.
Thanks to all who raised their voices, demonstrated, sent emails, analyzed the policy, blogged and promoted the issue, contacted congress and engaged your neighbors, friends and families. You made this victory possible. And the struggle continues.