Regulating Wall Street
The financial crisis exposed many abuses by giant Wall Street firms. Consumers were targeted by unfair practices, from credit cards to subprime mortgages. Brad Sherman helped author the new Wall Street Reform Act, which will create a financial products consumer protection bureau, increase capital requirements for banks, and end conflicts of interest for bond rating agencies. The bill will also bring more transparency to the Federal Reserve and impose tough regulation on the shadowy derivatives that played a major role in causing the financial crisis. As well, Congressman Sherman is now cosponsoring new legislation to break-up the biggest financial institutions, saying "too big to fail, is too big to exist." Never again should a bank demand a bail-out by claiming that if it goes down, it's big enough to pull down our entire economy. Brad Sherman is also co-sponsoring legislation to have the Government Accountability Office fully audit the Federal Reserve.
Ending Wall Street Bailouts
Nearly two years ago, Brad Sherman led the effort to oppose the TARP, the big bailout for Wall Street. Unfortunately, TARP became law in late 2008.
Last year, the Obama administration tried to get new authority to spend unlimited amounts to bail out banks in case of any new financial crisis. Congressman Sherman called this proposal "TARP on steroids" and led the successful effort to keep it out of the Wall Street Reform Act. In fact, Congressman Sherman worked successfully to include in the Act a provision which terminated TARP, immediately returning $225 billion to the Treasury, and keeping these funds from being used for more bailouts.
Congressman Sherman is working on legislation to prevent abuses in overdraft protection. New legislation would require banks to obtain the consumer's consent before enrolling them in expensive overdraft programs. Banks would be required to warn customers when an ATM transaction would cause an overdraft and give the customer an opportunity to cancel the transaction before the overdraft fee is charged. Finally, banks would be prohibited from reordering withdrawals to maximize customer fees.
Credit Card Reform
Congressman Sherman cosponsored the Credit Cardholders Bill of Rights Act, which President Obama signed into law last May. The new law bans retroactive interest rate hikes on existing balances, double-cycle billing and due date gimmicks. The bill also protects cardholders against arbitrary interest rate increases and requires the card companies to allocate payments to pay-off the debt that bears the highest interest rate first. It requires companies to mail statements at least 21 days before the due date. Some credit card companies are trying to increase rates before the new law goes into effect. That's why Congressman Sherman cosponsored the Expedited Card Reform Act to move up the effective date of these reforms.
Private Transfer Tax on Real Estate
As the Wall Street Journal recently reported, Congressman Sherman spoke out against a new predatory scheme that attaches transfer fee covenants to homes. Under the scheme, a clause is put into the deed requiring that one percent of the sale price is remitted to a particular Wall Street entity every time the home is sold for a period of 99 years. The fees rob equity from the homeowner and make it more difficult to resell the home, complicating the title search and introducing other hurdles into the settlement process. The FHA has already prohibited these so-called "Wall Street home resale fees" on homes purchased with government-insured mortgages.
At a May 26th hearing of the Financial Services Committee, Brad Sherman raised this issue with the regulator of Fannie Mae and Freddie Mac and urged him to use his authority to forbid the enterprises from backing mortgages on homes encumbered by these fees. Hopefully, by blocking mortgages on such homes, we can end this insidious scheme before it becomes widespread.