U.S. Senator Judd Gregg (R-NH), a member of the Senate Banking Committee, issued the following statement after the 59 to 39 passage of the Restoring American Financial Stability Act of 2010.
Senator Gregg stated, "In September of 2008, our nation experienced a financial crisis of a type not seen since the Great Depression. Today, nearly two years later, individuals and businesses across the country are still struggling to recover from the resulting economic downturn. The recent crisis highlighted very serious flaws in our financial regulatory structure, including the inability to resolve systemically significant financial entities, inadequate oversight of the over-the-counter derivatives market, a patchwork system of prudential regulation, and weaknesses in the area of consumer protection. These are problems that my colleagues on both sides of the aisle have agreed should be fixed. Unfortunately, the bill approved by the Senate today fails to adequately address the root causes of this crisis and instead places layer upon layer of unnecessary new regulations on financial institutions that will undoubtedly have a chilling effect on the ability of American families and businesses to access credit at a reasonable cost.
"The goal here should be to reduce the systemic risk in our financial system so that a similar crisis does not occur again. At the same time, any reform legislation should maintain America's status as the preeminent global destination for capital investment. Using these common-sense goals, the Senate could have put in place the necessary safeguards for our financial system without threatening to drive capital and jobs overseas. Kowtowing to the populist whims of the White House, my Democratic colleagues unfortunately ignored these goals and produced a largely partisan bill that will do significant harm to the availability of credit and stifle lending--from the smallest community bank to the largest Wall Street firm.
"The initial version of the financial regulatory reform bill that Chairman Dodd brought to the floor weeks ago is riddled with harmful provisions. For instance, the new regulations on the over-the-counter derivatives market will severely restrict the ability of American businesses -- small and large -- to manage risk in a cost-effective manner. This provision will likely push significant portions of this $600 trillion market overseas and make our financial system less stable and transparent. The newly created Consumer Financial Protection Bureau also represents a massive expansion of the federal government. This agency will create more bureaucrats, more red tape, and sweeping government powers over consumer financial products with little regard for how it will impact the safety and soundness of our financial institutions and American's access to credit. The extraneous corporate governance provisions requiring proxy access will unleash an onslaught of social and political activists whose agenda will have no relationship to increasing shareholders' value.
"These flaws don't fully cover the damage this bill will have on our country. As Senate debate proceeded, my colleagues managed to add a capital requirements provision that will put our financial system at a significant disadvantage with our international partners for years to come. They also flatly rejected amendments to reform GSEs and underwriting standards which would have addressed two major causes of the 2008 crisis. To claim that you have reformed our nation's financial regulatory system without addressing Fannie Mae and Freddie Mac or putting in place underwriting standards to ensure that homebuyers can afford their loans, simply flies in the face of reason.
"It is regrettable that we have come this far in the legislative process without actually accomplishing the necessary changes to make our financial markets stronger and more sound. In its current form, the Dodd bill will do considerable damage to our competitiveness as a nation, not to mention harming job growth and our economic recovery. I hope that my colleagues will realize the toll that these new regulations stand to take on our economy and make the necessary changes prior to this bill being signed into law."