Op-Ed: Bonuses Show Need For Financial Reform

Op-Ed

This past week, Wall Street banks announced billions in "bonuses" for some of the same "valued" employees who put our nation's financial system on the brink of disaster and are responsible for much of the economic turmoil throughout Southern Nevada and the United States. Bank of America approved $4 billion in bonuses, while AIG plans to pay out $100 million to employees in its financial products division, the same unit whose risky bets put the company on the verge of collapse.

These bonuses are unacceptable and Congress must act immediately to pass comprehensive financial regulatory reform to prevent this type of irresponsible, reckless and risky behavior.

In the fall of 2008, Congress authorized a $700 billion assistance program for our nation's financial sector. The intent of the Troubled Asset Relief Program was to jump-start lending to U.S. businesses and provide necessary liquidity to the financial sector.

In return for saving the financial sector, Congress expected Wall Street would act in good faith to restore the nation's economy. Wall Street, however, remained selfishly focused on the financial well being of its own executives while Americans across the nation struggle to keep a roof over their heads and provide food for their families.

When Congress passed TARP, it failed to ensure adequate accountability from Wall Street. Billions of taxpayers' hard-earned dollars were given to bankers with few strings attached. I was not yet a member of Congress when the original TARP legislation passed.

As I said at the time, if I had been a member of Congress, I would have voted against TARP because it lacked the necessary safeguards to protect middle-class Americans. Early in 2009, I voted against a measure to provide the Obama administration with the second $350 billion from the TARP program because I believed it again lacked critical safeguards to protect taxpayer dollars.

Years of reckless and risky behavior by Wall Street have demonstrated to the American people that Wall Street is far more concerned with its own bottom line than with the financial well being of families in Southern Nevada and across the country.

Despite receiving an unprecedented amount of assistance from the taxpayers, Wall Street has turned its back on Southern Nevadans and the American people. Not a day passes without a homeowner or small business owner contacting my office to voice discontent with banks.

Too often homeowners making good-faith efforts to make their mortgage payments cannot even get their lenders on the phone while small business owners are denied the credit they need to keep their doors open or to expand and create new jobs. This is unconscionable.

The CEO of J.P. Morgan Chase recently said that he is "sick of bankers being vilified." I can assure him that this "vilification" will end when Wall Street firms stop acting like villains and become responsible citizens.

As long as Wall Street continues to pay out huge bonuses while real Americans struggle to make ends meet, and is unwilling to be part of the solution, bank executives must be held responsible. This means returning every penny of taxpayer funding to the government.

In December, I joined with my colleagues to pass the most sweeping reform of the financial sector since the Great Depression. As the current financial crisis has demonstrated, our existing regulatory structure is outdated and in dire need of repair.

At its essence, we have a 20th century regulatory system for a 21st century financial system. The legislation passed by the House creates a nimble regulatory structure, capable of responding to today's ever-changing financial world.

Among other necessary changes, including mortgage lending reform and the establishment of an agency devoted exclusively to protecting Americans from unfair and abusive financial practices, the Wall Street Reform and Consumer Protection Act of 2009 ends egregious and excessively risky compensation standards at financial institutions. When the president signs this legislation, the era of taxpayer-funded bailouts will end forever. It is important that the Senate act on Wall Street reform legislation as soon as possible.

Until Wall Street is regulated by common sense regulations, the financial sector apparently will continue to act in its own interests and ignore the American taxpayers who saved it.

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