Congresswoman Maxine Waters (D-Calif.) issued the following statement today opposing H.R. 6684, the Spending Reduction Act of 2012, which would undo certain aspects of the Wall Street Reform and Consumer Protection Act.
While it is clear that the Republican Majority's H.R. 6684 is an attempt to generate votes for Speaker Boehner's "Plan B," when it comes to protecting the American middle class from another taxpayer bailout, H.R. 6684 gets a failing grade.
First, the plan repeals our financial regulators' authority to wind down systemically important financial firms when their insolvency threatens the stability of the U.S. economy. This repeal of Wall Street Reform's Orderly Liquidation Authority produces illusory savings through budget gimmicks, and would remove a critical tool in our regulators' arsenal to mitigate systemic risk. All of us who witnessed Lehman Brothers' collapse in 2008, and the financial contagion that it sparked, understand that we must have a means by which to shut down financial firms in an orderly fashion. And what's worse than using accounting tricks to find these so-called "savings" is that the Republicans fail to replace the Orderly Liquidation Authority with any alternative.
H.R. 6684 would also tie the hands of the Consumer Financial Protection Bureau (CFPB), an agency we formed under the Dodd-Frank Wall Street Reform Act to make sure financial institutions play by the rules when it comes to mortgage and student loans, credit cards, and payday lenders. The CFPB, like the agencies in our government that regulate banks for safety and soundness, is independently funded to ensure that consumer protection is never subject to the pressures of political influence. H.R. 6684 would eliminate that independent funding and instead make the Bureau the only banking regulator subject to the appropriations process. This funding gimmick is just a backdoor way to undermine a new and desperately-needed agency that will prevent a return of the same exotic products that caused the 2008 financial crisis.
The plan likewise eliminates the Office of Financial Research (OFR), an agency tasked with collecting information on the health of our financial markets and conducting research on financial stability issues. Like a storm warning center, OFR will gather information about emerging threats to our financial system and share that information with other regulators to help us intervene before a crisis.
Finally, H.R. 6684 ends the Home Affordable Modification Program (HAMP). I have not been shy in pointing out the need for improvements to HAMP, but my Republican colleagues, through years of the foreclosure crisis, have refused to come up with any alternative to keep families in their homes. Instead, they would like mortgage servicers to continue business as usual, unfettered by any rules and requirements, so that the "market can bottom-out." After years of robo-signing and other scandals, the Republicans' failure to address the abuses in the mortgage servicing industry, and their attempts to repeal programs that can help vulnerable families, are simply unconscionable.
It is unfortunate that at end of another session of Congress, the Republicans are again playing "Russian Roulette' with the U.S. economy when they should be working in bipartisan manner with House Democrats to avert the fiscal cliff.