Wall Street Reform And Consumer Protection Act Of 2009

Floor Speech

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I am pleased to join Mr. Stupak, Mr. Van Hollen, and Mr. Larson in support of this amendment.

The amendment does three things: It grants the CFTC and the SEC the authority to prohibit specific swaps, including the abuse of naked credit default swaps that distorted the derivatives market. It narrows the bona fide end user exemption in the bill to prevent loopholes that might allow major financial players to evade the requirements of this bill while ensuring that legitimate end users still have access to this financial tool. It ensures that no illegal swap transaction will remain a valid contract in a court of law. We should not countenance predatory behavior in any way, and we should make sure market players are not financially benefiting from the abusive and corrupt practices that helped to initiate this debilitating recession.

With credit default swaps, companies took bets that others would fail without facing any risk themselves in the case of default. Other institutions took those bets even though they could not pay out if the unthinkable happened. It was a casino culture where traders played with taxpayers' dollars and made sure they won either way, always at the expense of regular people.

And when the defaults started to mount up, the whole house of cards came tumbling down.

Why did the credit default swaps, once just a financial tool to hedge risk, become the province of rampant and reckless speculation? Because they remained unregulated. The bill before us is a good step toward repairing this oversight and regulating markets, but we need to do more. Taken together, the changes in this amendment will strengthen regulation over these once useful financial tools and will help ensure that the entire Nation does not get taken for another ride on account of bad behavior in the derivatives market.

I urge my colleagues to support this amendment.

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