Op-Ed: Rep. Keith Ellison: Sound footing and an end to abuses

Op-Ed

The Wall Street Reform and Consumer Protection Act before the U.S. House of Representatives will mark the end of an era -- the end of lax financial regulation, deregulation, predatory mortgage lending and bank bailouts.

When signed into law, the act will usher in an era of consumer protection, stronger financial regulation and the orderly breakup of large financial firms deemed "too big to fail." Our current financial crisis is the most serious since the Great Depression, but the financially abusive and irresponsible policies that set the stage for it are about to change.

The result will be financial prosperity and stability for the future.

One of the key elements of reform is the Consumer Financial Protection Agency (CFPA). The core of our financial crisis was the failure to protect the interests of consumers. Many abusive and predatory lenders avoided federal supervision altogether. The Federal Reserve, which is tasked with safeguarding consumer financial interests, never exercised its powers to stop abusive practices in the mortgage lending and credit card industries. The current system needs an overhaul.

The CFPA would strengthen regulatory standards and subject all institutions engaged in consumer credit transactions to the same rules of the road. It would have the power to prohibit unfair, deceptive and abusive consumer financial products and provide clear terms and conditions for consumers. Ultimately, the CFPA would banish the worst products and practices of a bygone era to the dust bin of history. By protecting consumers, it would also put the financial system on sounder footing.

But consumer financial protection is only one important part of this landmark legislation. This bill would also put in place needed regulation of derivatives, hedge funds and credit-rating agencies. It would protect and empower investors, giving them greater say in electing company board members and on executive pay.

To prevent future financial meltdowns, the legislation would establish a new Financial Services Oversight Council to study potential risks to the financial system and identify financial firms that should be subject to stricter regulation.

Finally, the bill would mark the end of the era of bailouts by giving regulators the powers to break apart firms that are "too big to fail" and establish an orderly process for winding them down should they get into trouble -- not on the taxpayer dime.

Some want the status quo. Apparently, having 2.2 million homes in foreclosure this year, one in four homeowners owing more on their home than it is worth and $14 trillion lost in household wealth isn't bad enough for some detractors to support change. Their philosophy is to protect what is best for the bottom line and leave working families to fend for themselves. They claim that there is a tradeoff between stronger consumer protection and higher costs on banks and other regulated institutions. This is a false choice, and Minnesotans know it.

We simply can't afford to maintain the failed policies that allowed a rigged game of casino capitalism to run rampant. I am proud to support this historic bill to protect consumers, investors and small businesses while putting our financial system on sounder footing.

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