Washington, DC— Nevada Senator Harry Reid entered the following remarks into the Congressional Record last night regarding Republican efforts to block the Levin-Merkley amendment to Wall Street reform. The amendment would strengthen the “Volcker Rule” in the underlying bill by further restricting high-risk trading on Wall Street:
“Months ago, one of the most respected names in finance, Paul Volcker, the former chairman of the Federal Reserve Board, made a common-sense proposal to protect taxpayers from the risk-taking on Wall Street.
“The essence of the proposal was this: Banks that have an explicit or implicit backing from taxpayers, through deposit insurance or otherwise, should not be allowed to make investments for their own profits. Banks can do one or the other, but not both.
“The goal of the proposal is clear: We will not let Wall Street bankers take advantage of taxpayers to make themselves rich.
“Wall Street should be free to serve their clients, help investors save and allow entrepreneurs to raise the money they need to grow their businesses. But big banks should not be taking exaggerated risks that benefit only themselves and their own pocketbooks.
“Our Wall Street reform bill has a provision that reflects this principle. Senators Levin and Merkley have been working for weeks on a proposal that makes the tough underlying bill even tougher by giving taxpayers additional safeguards.
“Their amendment would stop big banks from high-risk speculation and stop them from investing in hedge funds or private-equity funds. It would impose tough capital requirements on the biggest firms that pose the biggest risks to the financial system.
“And it prohibits the conflicts of interest that allow Wall Street firms to bet against the very products they sell to their clients.
“Financial instruments and securities trading are complex. But this amendment is nothing more than simple common sense.
“It stops Wall Street from gambling away other people’s money with little risk and large reward. It rejects the rules in place today – which are the same rules that were in place when our economy nearly collapsed – rules that let big banks take home their winnings but ask for all us to cover the loses. And it says to those who game the system: the game is over.
“If Republicans are serious about learning from the mistakes of the past, they’ll join us. If they agree that protecting middle-class consumers, safeguarding families’ savings and protecting seniors’ pensions is more important than carrying water for Wall Street millionaires, they’ll join us. If they don’t, it will be clear to the American people who’s on their side, and who isn’t.
“And even if – in spite of all the evidence to the contrary – they still disagree that taxpayers shouldn’t be on the hook for big banks’ bad bets, I ask them to at least let us have a vote on this amendment, and let the majority rule.
“The Levin-Merkley amendment and this larger bill will help prevent future financial crises. They will guarantee taxpayers that they won’t ever again be asked to bail out a out bank that doesn’t want to take responsibility for its own mistakes. And they will make sure the disastrous recession our families and businesses have endured for the last several years does not get worse, and never happens again.”