Ted Kaufman - United States Senator for Delaware

Kaufman Statement on Wall Street Reform Conference Report

June 28, 2010

WASHINGTON, DC – Senator Ted Kaufman (D-Del.) issued the following statement on the Wall Street reform conference report:
 
“I will support the conference report, though I do so with mixed feelings and with significant reservations about a missed opportunity to enact needed structural reforms that would better prevent another financial crisis.
 
“Ultimately, the final product was the strongest possible bill that had the votes to pass. Those who supported stronger measures were constrained in our efforts, particularly because almost every Senator on the other side of the aisle did everything they could to stall, delay and oppose Wall Street reform.
 
“To be sure, the bill that has come out of conference includes some extremely important reforms.  It establishes an independent Consumer Financial Protection Bureau (CFPB) with strong and autonomous rulemaking authority and the ability to enforce those rules for large banks and nonbanking entities like payday lenders and mortgage finance companies. It also requires electronic trading and centralized clearing of standardized over-the-counter derivatives contracts as well as more robust collateral and margin requirements. I was also pleased that the bill includes a provision I helped develop to give regulators enhanced tools and powers to pursue financial fraud.  
 
“Unfortunately, I believe the legislation does not go far enough in addressing the fundamental problem of ‘too big to fail.’ Instead of erecting enduring statutory walls as we did in the 1930s in the Glass-Steagall Act, the bill gives additional discretion to the same regulators who failed to prevent the financial crisis and relies upon a resolution regime to successfully unwind complex and interconnected mega-banks engaged across the globe. I am also disappointed that key reform provisions like the Volcker Rule and the Lincoln swaps dealers spin-off provision were scaled back or severely compromised. The Volcker rule contains a giant loophole that allows megabanks partially to own, manage and run hedge funds and private equity funds.  Meanwhile, the Lincoln provision was scaled back so far that it now excludes more than 90% of all over-the-counter derivatives transactions.  
 
“Despite my repeated urging to pass laws that would help regulators to succeed, the bill mainly places its faith and trust in regulatory discretion. The justification for doing so included the need freely to negotiate international agreements on bank capital requirements and supervision.  Unfortunately, the early indications out of the G-20 and so-called Basel III discussions are not encouraging.  Needed reforms are being watered down and delayed for years. This purported excuse for Congress not to impose statutory lines already is evaporating.  

“Regardless, after decades of deregulation and industry self-regulation, it is now incumbent upon the regulators to reassert themselves and establish rulemaking and supervisory frameworks that not only correct their glaring mistakes of the past, but also anticipate future problems, particularly risks to financial stability.  
 
“Congress therefore has an important role to play in overseeing the enormous regulatory process that will ensue following the bill's enactment.  It is critical that the American people stay focused on these issues, if just to help ensure that Congress will fulfill its oversight duty and its duty to intervene if the regulators fail. Likewise, although I will be leaving the Senate in November, I will be watching closely to see how the regulators follow through on the enormous responsibilities they are being handed.”     
  

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