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Public Statements

Financial Regulatory Reform

Floor Speech

Location: Washington, DC

Mr. LeMIEUX. Mr. President, I am here today to talk about the bill the Senate just voted on and passed, the financial regulation overhaul bill. It is, in my mind, a missed opportunity. We had the opportunity to truly address the causes of the financial meltdown and put into place measures that would stop the meltdown from happening the next time. But, unfortunately--as I have seen in about the year's time I have had the privilege to serve in the Senate--it seems it is the predilection of this Congress to take a crisis and then come forward not with a narrowly focused and tailored solution but, instead, a large-ranging, comprehensive bill that creates more government, that creates more bureaucracy, that puts more debt on our system of government, and still fails to address the very problem we should be trying to focus upon.

We were supposed to rein in the wild and risky speculative tools and empower our regulators to prevent another crisis. But we did not. I heard Senator Dodd, who I have enormous respect for--and I think he put a tremendous amount of time into this bill, but I heard him on the floor the other day, in giving his sort of summation as to why this bill should be passed, saying this will not stop any future recessions. He is right. He is right because we did not do what we needed to do in order to truly fix the problems that happened back in the 2007-2008 era when we had this tremendous financial meltdown--this meltdown which has depleted trillions of dollars of the net worth of Americans; this meltdown that has led to one of the greatest, if not the greatest, recession since the Great Depression.

In my home State of Florida, people are suffering mightily. We have nearly 12 percent unemployment. We are either No. 1 or No. 2--depending upon the month--in mortgage foreclosures, and our people are behind on their mortgage payments more than any other State in the Union.

We are a State that has been based, perhaps too much, on growth. So when folks are not coming to build a new home, the contractor does not have a job. When folks are not coming to visit our beaches or our tourist attractions, the restaurateur, the hotelier--they lose their work. So things are very difficult in Florida.

This financial crisis stemmed in part from some of the problems we saw in lending, in real estate, and there was no place that was any worse than what happened in Florida. What this bill fails to address: the underwriting standards that should have been in place to stop these so-called ninja loans--``no income, no job.'' They called them ninja loans. Anybody could get one, and people were put into homes they could not afford.

Why was that able to happen? It was because there were no underwriting standards. There was no skin in the game for those getting the mortgage. There was no skin in the game for the mortgage broker, who was able to sell off this mortgage to Wall Street, where there was this vast and great demand to bundle these products into mortgage-backed securities, and, for the first time ever, tie our real estate market, our homes--our most important investments--with the financial markets.

As soon as that was done, the speculation and the speculators ran wild. This bill does not do enough to prevent that in the future, to provide the real skin in the game that should be needed to trade those mortgage-backed securities. We failed to address those two factors. Perhaps even worse, we failed to address Fannie and Freddie, the government-sponsored entities that stood as silent guarantors to all these mortgages, that let the market have faith and confidence that the government was the backstop to these mortgages that should have never been let. This bill fails to address that. Two of the leading causes of the financial debacle we failed to addressed.

Finally, a point we needed to address, and we did: My colleague and friend, who presides over the Senate this afternoon, was the person who was the leading proponent on trying to do something about the rating agencies, and we did do something. I was pleased to work with Senator Cantwell, and I was appreciative of the efforts of Senator Franken, to try to do something about these rating agencies. And we did.

That is one good thing about this bill. They are written out of law. These rating agencies compounded the problem because when these mortgages, packed together--mortgages that were not any good, that were not going to get paid, that then got turned into a trading vehicle--when they went up to Wall Street, these rating agencies that are paid for by the investment banks stamped them with AAA ratings, gave them the ``good housing seal of approval'' and let the world believe they were sound investments. They failed. And lo and behold, we find that the government has given a sanction in law to these rating agencies to be the determiners of creditworthiness--a monopoly, if you will.

Well, one good thing this bill does is to strip that out. No longer will they be given that state-sponsored monopoly. Now the marketplace will have to work. Now we will not be so relying upon people who are paid by the investment banks that did not do their homework and in part caused this crisis.

If we would have tackled the GSEs, Fannie and Freddie, and if we would have tackled underwriting standards, I would be here giving a speech today talking about why I voted for the bill. But we only did one of the four things and, unfortunately, now, we have a bill that Wall Street loves. Citigroup loves it. Goldman Sachs loves it. But Main Street is very concerned about it. We are going to make sure that orthodontists are regulated because they, every once in a while, extend credit to their patients. But the folks on Wall Street, who caused these problems, and the underlying cause of the debacle, the mortgage problem, the underwriting problem, and the Fannie and Freddie problem do not get addressed.

According to the study by the U.S. Chamber of Commerce, this bill will create a huge new governmental bureaucracy: 70 new Federal regulations through the Bureau of Consumer Financial Protection, 54 new Federal regulations through the U.S. Commodity Futures Trading Commission, 11 new Federal regulations through the Federal Deposit Insurance Corporation, 30 through the Federal Reserve, 205 through the SEC.

You may say: Well, that sounds good. We need more regulations, right? There was a problem. But if the regulation does not go after the problem that caused the debacle, what do the regulations do? We are in a situation right now where business in this country is frozen. It is frozen solid because of the actions of the Congress and this administration who are doing so much to this economy that big business and small business alike do not believe they can hire new workers.

There is so much uncertainty in the marketplace. I hear this from small businesspeople in Florida where we have 1.9 million small businesses, to workforce centers which are trying to get people back to work, to incubators which are trying to grow new jobs, to presidents of chambers of commerce, and other folks I talk to regularly. They tell me business is frozen. Washington is doing so much to the economy they do not know where to turn next. Because they do not know what the future looks like, and because this government is pulling these huge levers on the economy, they believe they cannot make any moves.

Because of the health care bill, businesses in Florida, small businesses are telling me they are not going to hire new people because they cannot afford the new regulation. In fact, some of these businesses are not only going to not hire new people, they are going to let people go.

This financial regulatory reform bill--a business in Florida has told me its trading desk is going to the Bahamas. Those folks are now going to move and no longer add to our tax base and the wealth and diversity of our community because this regulation is going to put them in a situation where business says it is more beneficial to move them out of the State, out of the country.

There are always unintended consequences. When we pull these huge levers on the economy, we create tremendous uncertainty, and business does what business needs to do to keep its people working and to make profits. That is what business is focused on. Those are the jobs that allow all of us to work, to provide for our families. Right now, those jobs are under siege. In a State such as mine where we have nearly 12 percent unemployment, where times are especially difficult, the last thing in the world we need is for the Federal Government to be monkeying with the economy to the extent that businesses can't feel as though they can hire new workers.

This financial regulatory reform bill does more of what the health care bill did, and it seems to be the penchant of this Congress. We should be focused on jobs. We should be here day and night trying to find ways to make sure business has the incentives it needs to create new jobs and retain jobs, because we need to get people back to work.

This financial regulatory reform bill was a bill we should have had 80 or 90 votes on. It should have been narrowly focused and tailored on the problems that caused the financial debacle of 2008 that we still suffer through. This Chamber needs to get in the business of focusing on what should be done to address the problem and not using every crisis as an excuse to grow government. This new consumer agency we created will cost billions of dollars and will empower a new Federal Government executive, who reports to no board, to be able to make broad and wide-ranging policy decisions across this country and in the boardrooms of the businesses of America's companies. That is how Washington solves a problem these days. We don't fix the SEC which is the agency that is supposed to be doing the job. We don't go in and fire all the people at the Securities and Exchange Commission who should have been on top of this. We create a whole new governmental level of bureaucracy. We layer governmental agency on top of governmental agency, create more power, create bigger government, spend more of your money, and run this country into further debt.

We need a change. We need to do things differently. I wish I could have voted for this. I wish it would have focused on the issues it needed to, but, unfortunately, I can't because it does more harm than good. I am appreciative of my colleagues for supporting the amendment I did with Senator Cantwell on the rating agencies, but only in that regard and in a few other regards did we do something that actually helped. Most of what we did didn't fix the problem and it caused more harm than good.

With that, I yield the floor.


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