Banking and securities regulation

My 20/20 Vision supports banking and securities regulation that protects the public interest and respects the free market.

The state of our economy represents a tragic period in American history that did not have to happen. It has resulted from irresponsible government policy that has allowed the free market to go unchecked. Government policy needs to ensure that there are reasonable controls and limits on the market so that it operates in the best interests of the country as a whole and to ensure that the economy is not subject to massive peaks and plunges that yield devastating effects.

In my law practice, I have handled many matters dealing with the effects of banking on the economy and ordinary citizens. Many banks have become excessively large, profit-driven organizations that have lost sight of the fact that they are supposed to serve a public purpose as well as to make profits. They have become too big, they take too many risks with depositors’ money and they have lost touch with the communities where they operate. However, because banks are publicly chartered, they have a responsibility to serve the public.

Prudent and productive policies were put in place as a result of the Great Depression. These policies regulated banking structure and were designed to protect against another 1929-type collapse of the financial system. The Glass-Steagall Act of 1933 established the Federal Deposit Insurance Corporation and included banking reforms, some of which were designed to control speculation. But the banking lobby and other special interests have used their power and influence to overturn these regulations, ultimately repealing Glass-Steagall in 1999. The resulting deregulation has prevented the government from protecting the public interest.

Securities regulations have also failed to keep pace with the changing economy. Our markets are still regulated under the Securities Exchange Act of 1934, and while some of its provisions are still applicable today, many are outdated. Congress must legislate a systematic overhaul of banking and securities regulation in order to ensure that our economy doesn’t go through again what we’re going through now.

In my law practice I have represented prosperous, honest and hard-working people who are on the verge of losing everything due to the near collapse of the financial markets, foreclosures and the credit freeze. The federal government must provide a basis for economic security so that hard-working people are not subjected to losing their jobs unnecessarily.

Lawmakers must understand the organic relationship between a healthy economy and regulation. Regulation is the prevention that heads off the need for critical-care treatment. Understanding this relationship is the first step in finding the cure to what ails us and preventing relapses.

As senator I will support legislation that:

• Re-regulates financial markets in a way that makes clear distinctions between loans, securities and deposits.
• Regulates the types of financial instruments that lead to the near-collapse of 2008, including derivatives and credit-default swaps.
• Minimizes conflicts of interest in the granting and use of credit by the same entity.
• Limits the financial power of depository institutions to ensure soundness and competition in the market for funds, whether loans or investments.
• Limits the degree of risk in securities trading, where losses could threaten the integrity of deposits.
• Creates parallel risk-management systems for depository institutions and securities businesses such as bank holding companies.
• Caps bank interest rates, fees and other charges by financial institutions.
• Creates consumer protections designed to eliminate abusive lending and banking practices.