Foster Votes For Financial Regulatory Reform

Press Release

Foster Votes For Financial Regulatory Reform

In order to prevent future taxpayer funded bailouts, protect consumers from abusive financial practices, and stabilize the financial system, Rep. Bill Foster (IL-14) voted to pass H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009 today. Foster is a member of the House Financial Services Committee, the Committee that drafted this legislation.

"It is important that we learn from the financial meltdown that occurred last year and make meaningful reforms to safeguard our financial system from catastrophe," said Foster. "This historic and competently executed legislation is designed to restore market confidence, ensure the end of taxpayer funded bailouts and modernize the rules governing our 21st century economy."

H.R. 4173 creates an industry-funded dissolution fund providing for the orderly wind-down of "too big to fail" financial firms. This fund is modeled on the successful FDIC insurance fund that has allowed banks to fail gracefully while protecting the financial system and investor deposits for over 75 years. The bill also improves regulation of financial derivatives, brings large non-bank financial institutions under regulation, and contains consumer protections against predatory lending.

The bill incorporates five provisions personally authored by Rep. Foster. One provision would prevent fraud like that committed by Bernie Madoff, by requiring that those who advise and manage money on behalf of others either handle the money through an independent custodian, or submit to an annual audit verifying the accuracy of investor statements. Another provision reforms oversight of the Credit Rating Agencies that were responsible for mis-rating the complex financial instruments that were at the heart of the crisis. Other provisions relate to electronic forms of complex financial derivatives, risk retention in the debt securitization process, and contingent capital requirements for large financial holding companies.

"The Madoff scheme financially devastated thousands of investors, and these victims didn't know until it was too late that they were being defrauded," said Foster. "These simple requirements should give investors peace of mind that what is on their statements each month is true and accurate."

Concluded Foster, "Many aspects of our financial system are arcane and complex, and yet their proper functioning is absolutely essential to job creation and growth of large and small businesses. I was proud to be part of a group of legislators that dug into the complexity, identified what is broken and needs fixing, and strengthened what works well and needs preserving in our free market system."

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