Government Regulation of the Financial Services Sector

GOVERNMENT REGULATION OF THE FINANCIAL SERVICES SECTOR -- (House of Representatives - July 14, 2009)

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Mr. HIMES. Mr. Speaker, I rise to address the House this afternoon because, like so many Members of this body, I am engaged in a terribly important exercise of working to think through the next generation of regulation that will oversee the stability and health of our financial services sector. This is a terribly important and challenging thing that we do. We need to make sure that we do what is necessary to have a vibrant, innovative, thriving financial services sector that employs the people of Connecticut and the people of this Nation, that pays taxes in Connecticut and to this Nation, but that we toe the line in such a way that we never find ourselves in the position that we are in today of tens and hundreds of billions of taxpayer dollars being brought to the table to bail out a private industry that took too many risks.

And I rise this evening because I am concerned by the conclusion being drawn by some of the Members of this House, because our regulatory apparatus which, let's face it, was crafted in the 1930s, failed in many respects. And, boy, did it fail in some spectacular aspects. The conclusion seems to be drawn that government cannot regulate, that we should get out of the business, that we should leave the financial services sector entirely to its own devices, that somehow individual responsibility alone will create a stable and vibrant financial services sector.

And so I want to hearken back to the history of this body and this government crafting smart regulation. Think back 110, 120 years ago. American families ate rotten food. They bought snake oil in the guise of pharmaceuticals. They worked in factories that burned down and killed hundreds. They lived in cities that were unsanitary.

And over 120 years, 110 years, maybe starting with the fine Republican, Teddy Roosevelt, this Nation said we can do better. We can put in place smart regulation that protects our citizens and that adds to the quality of life of every American family. And, in fact, that is what happened, and we haven't gotten it quite right. There have been spectacular failures. But over that 120 years, the efforts of this government to craft smart, efficient regulation hasn't destroyed the economy.

The economic growth in this country over that period of time has been nothing short of spectacular. But it has protected American families. Very few families anymore buy snake oil, buy securities that would put Madoff's securities to shame, find themselves working in factories that burn down and nobody gets out because the doors are locked. 110 years, 120 years of success, not unadulterated success. There have been failures. But over time, the efforts of this country to put in place smart and efficient regulation have helped this economy and have helped the quality of life of American families.

And that is what we must do. We must not shrink from the task just because the SEC blew it on the Madoff case or because other regulators weren't watching new and dangerous markets closely enough. We must not shrink from the task of thinking through what new round of financial regulation allows that industry to thrive, allows that industry to provide credit to American families, to small businesses, to allow our economy to grow, but which never, ever puts us in the kind of risky position that we're working so hard to dig ourselves out of right now.

We can do this. There's a century-long tradition of our working constructively in that direction. So I know we can do this. The answer is smart, efficient, modern regulation for the benefit of everyone and the benefit of this economy.

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