When it comes to reforming Wall Street, the contrast is clear: Democrats led the fight to hold Wall Street accountable for the reckless gambling that cost 8 million Americans their jobs, while Republicans held secret, closed-door meetings with Wall Street executives and fought to put their corporate interests ahead of the middle class. Only three Republican senators were willing to join Democrats in standing up to Wall Street.
Years without accountability for Wall Street and big banks brought us the worst financial crisis since the Great Depression, the loss of 8 million jobs, failed businesses, a drop in housing prices, and significant losses in personal savings. While Republicans protected Wall Street, Senate Democrats worked to restore responsibility and accountability in our financial system with the Wall Street Reform and Consumer Protection Act (P.L. 111-203). This landmark legislation, signed into law in July, will put in place the reforms necessary to grow the economy and create jobs – giving Americans confidence that there is a system in place that works for and protects them.
Despite the overwhelming call for reform by the American people, Senate Republicans spent weeks obstructing progress on the bill in an effort to protect special interests and banks. They attempted to water down this vital legislation on behalf of CEOs and credit card companies. But Democrats refused to accept their efforts to create carve-outs for lobbyists and reckless Wall Street executives, believing that hard-working American families deserve strong protections from the predatory practices of Wall Street. That is why Democrats persevered in the fight for the passage of Wall Street reform legislation.
Highlights of the Wall Street Reform and Consumer Protection Act
Consumer Protections with Authority and Independence. The law creates a new independent watchdog, housed at the Federal Reserve, with the authority to ensure American consumers get the clear, accurate information they need to shop for mortgages, credit cards, and other financial products, and protects them from hidden fees, abusive terms, and deceptive practices.
Ending Too Big to Fail Bailouts. The law ends the possibility that taxpayers will be asked to write a check to bail out financial firms that threaten the economy by: creating a safe way to liquidate failed financial firms; imposing tough new capital and leverage requirements that make it undesirable to get too big; updating the Fed’s authority to allow system-wide support but no longer prop up individual firms; and establishing rigorous standards and supervision to protect the economy and American consumers, investors and businesses.
Advance Warning System. The law creates a council to identify and address systemic risks posed by large, complex financial companies, products, and activities before they threaten the stability of the economy.
Transparency & Accountability for Exotic Instruments. The law eliminates loopholes that allow risky and abusive practices to go on unnoticed and unregulated — including loopholes for over-the-counter derivatives, asset-backed securities, hedge funds, mortgage brokers and payday lenders.
Executive Compensation and Corporate Governance. The law provides shareholders with a say on pay and corporate affairs with a non-binding vote on executive compensation and golden parachutes.
Protecting Investors. The law provides tough new rules for transparency and accountability for credit rating agencies to protect investors and businesses.
Enforcing Regulations on the Books. The law strengthens oversight and empowers regulators to aggressively pursue financial fraud, conflicts of interest and manipulation of the system that benefits special interests at the expense of American families and businesses.