Wall Street Reform Is Needed Now!

Now that health care reform has been passed, it is time to take on the next big step in getting our country back on track. Reforming the securities and practices in place in our financial structure needs to happen now.

The “Wall Street reform” being discussed in the media is also known as H.R. 4173 in the House of Representatives and S. 3217 in the Senate. It will establish many things, the biggest being the creation of a Consumer Financial Protection Agency. We need these reforms to make mortgages, credit cards and bank loans transparent and understandable. We need to end the credit default swap agreements that caused the failure of AIG.

Ensuring that Wall Street doesn't drive the economy off a cliff again should be our number one priority, along with job creation. The Senate Finance Committee is moving legislation supported by the President which does the following:

1. Greatly increases bank capitalization requirements, to head off the need for any future bailouts.

2. Requires banks to pay into a fund which would be tapped in the event of future crises. This further prevents the risk of taxpayers being asked to bailout the big banks.

3. Forces the trading of derivatives, CDO's, and other arcane financial instruments into an open market. One of the great causes of the financial meltdown of 2008 was the fact that these deals were being done behind closed doors, which prevents investors from knowing the fair market price of these instruments.

4. Enhances enforcement powers of the Securities and Exchange Commission, and creates "say on pay" rules, to give shareholders greater control over executive pay.

5. Creates a Consumer Financial Protection Agency, under the auspices of the Federal Reserve. This provides for the oversight necessary to protect consumers from unfair and misleading financial products.

What is needed, in addition, is the reimposition of some form of the Glass-Steagall Act, which kept commercial and investment banking seperated. The repeal of this law, in 1999, is what led to the current situation of "too big to fail". Banks should not be too big to fail, and reinstituting this seperation is crucial to the long term safety of our financial system.

The American public cannot afford to allow these banks and investors to police themselves. They won’t. We need to stand up to the reckless practices that caused our financial system to collapse. The DOW broke 11,000 last week, but there has been no “trickle-down effect” (a common Republican philosophy) because the devastation to the system was so deep there are still no jobs. The GOP is denying that there is even a problem!

This is not about partisanship. This is not about the presidential election in 2012. This is about what is happening in our country at this very moment. It is about The United States of America and every citizen that has been affected by the worst financial crisis since the Great Depression. It is time to end the madness. It is time to pass Wall Street Reform.

Approved by Fred Johnson for Congress