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Op-Ed: Stringent Reforms, Tough Accountability For Financial System

Op-Ed

By:
Date:
Location: Washington, D.C.

I have grown increasingly angry and frustrated by the sense of entitlement from Wall Street and big financial institutions.

Like most Idahoans, I believe that no business is too big to fail, and that everyone should play by the same rules. However, over the last year we taxpayers were forced to shell out billions in bailouts for people who knew their companies wouldn't fail, and who knew that they could get away with paying themselves huge bonuses, regardless of earnings.

Main Street suffered, while those on Wall Street who caused the problem made out like bandits. The game was rigged and the taxpayers lost -- lost jobs, tax dollars and faith in our financial system -- in a way that only amplifies the anger we all feel.

Thankfully, things are about to change.

After a year of work, Congress is about to consider a comprehensive overhaul of the regulations governing our nation's financial systems. The bill will be debated on the floor in the coming week, and I very much hope it will pass with a broad bipartisan majority.

I will vote for it in part because I am privileged to have been given the chance to craft key pieces of this legislation. One of the reasons the people of Idaho gave me an opportunity to serve in Congress is because they thought my 35 years of business experience might prove useful in helping move our country in the right direction.

For example, when I was running an Idaho forest products company, we could purchase currency futures or other derivatives to protect the company from changes in interest rates or big price shifts in Canadian timber. But over the last 10 years I watched as Wall Street speculators, betting with other people's money, mutated and abused derivatives without worry or fear of federal regulation.

The consequence of this and other Wall Street excess was to force taxpayer bailouts of one failing firm after another, and to plunge the economy into the worst recession in 25 years. But passing the bill Congress will take up next week will keep that from ever happening again.

This bill will require those speculative big banks and businesses to keep proper reserves, disclose their trades and submit to federal government regulation. They will only be able to take risks they can afford.

This bill will also make sure that failure of one firm will not put Idaho businesses, families and local government at risk. And if a big financial firm does fail, this bill makes sure that taxpayers won't suffer the loss -- the company's shareholders will.

Although I intend to vote for it, I don't like everything in this bill. In fact, parts do not go far enough to protect consumers and small business, whether they deal with a payday lender or a giant bank on Wall Street.

One section in particular can be improved. This week I will offer an amendment that will strengthen the regulatory system by changing the proposed Consumer Financial Protection Agency to a powerful Council of Regulators charged with establishing tough, new consumer regulations for all financial firms.

This "Council" would standardize consumer regulations and ensure that all state and federal regulators give consumer protection the same priority as is given to maintaining the safety and soundness of the institutions themselves.

One strong regulator with responsibility for both the financial soundness of a bank or other financial institution and protecting its customers from fraud and abuse is far better than splitting these tasks between two weaker, feuding agencies, each with only half of the accountability. Consumers will be better-protected if we have fewer agencies with broader responsibilities and a strict mandate for reform.

I believe in the free market and in the opportunity all Americans have to succeed, but everyone should play by the same rules. But the chance to succeed means that everyone -- every big bank, every auto company, every hedge fund -- must also be allowed to fail if they make mistakes. No matter how big or powerful a business becomes, never again should the American taxpayer be forced to bail out Wall Street, Detroit or anyone else.

I have been privileged to spend countless hours helping craft key pieces of this bill, which will impose some of the most stringent reforms and toughest accountability our financial system has seen in the last 75 years.

But that's what we need, because it's time to level the playing field and end the rigged game.


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