Issue Position: Finance and Banking

Issue Position

Restoring America's Financial Security

As we look at our banking system in the light of the global credit crisis that has paralyzed our financial system and brought uncertainty to our economy, I recognize that we must make long-term changes to our nation's financial structure by reforming the way we regulate our financial services industry to ensure that the events that led to the crisis are not repeated. I also believe that we need to carefully consider how to protect consumers and taxpayers from the excesses of Wall Street.

FINANCIAL LITERACY

The current economic environment has made it clear that the financial crisis we faced is not only a national one, but an individual one as well. The high cost of education and other goods and services and the easy availability of credit have left many Americans deeply in credit card debt, and the mortgage crisis has revealed that many Americans purchased homes without knowing what they were getting into and have now discovered that they don't have the ability to pay their mortgages in the long term.

I strongly support efforts to educate all Americans on how to manage their finances and prepare for the future. Financial literacy allows individuals to make sound financial decisions, provide for their own economic security, and meet goals like obtaining a college education, starting a small business, or owning a home. When young people learn to be financial responsible at an early age, they benefit throughout their lives, and I support financial literacy programs in our schools. Of course, it is never too late to become financially knowledgeable, and I would encourage you to visit the Idaho Department of Finance website to learn more about saving and investing wisely, protecting yourself from fraud, and effectively managing finances for your family or your business.

FINANCIAL REGULATORY REFORM

In July 2010 Congress passed The Dodd-Frank Wall Street Reform and Consumer Protection Act, and President Obama signed the legislation into law on July 21, 2010. While I support efforts to carefully examine our regulatory system, determine where and how it failed, and make the changes needed to ensure that these failures do not happen again, I remain concerned about a number of provisions in the legislation that dramatically increases the government's role in industries beyond the financial industry.

For example, I am concerned that the Consumer Financial Protection Bureau created by the Dodd-Frank Act has broad authorities that could dramatically impact the availability of credit for American consumers. Rather than addressing the actual gaps in existing regulation and fixing them, the Dodd-Frank Act simply piles on another bureaucracy with no indication that this regulator will be any more effective than the old ones. The Dodd Frank Act dramatically expands the role of government, including the authority of the Federal Reserve, and gives the government broad, undefined authority to regulate huge segments of the economy--including non-financial institutions that had nothing to do with causing the financial crisis.

I am also concerned that the Dodd-Frank Act puts taxpayers on the hook for firms that are determined to be "too big to fail." While on paper large banks are responsible to pay for the winding down of firms whose failure is determined to cause systemic risk, bail outs will initially be funded by taxpayers, with no certainty that other firms will survive to pay them back. I do not believe that the emergency actions taken by the government in 2008 should become the status quo for the way that the government handles the failure of private companies.

Lastly, I am deeply concerned that this law takes no steps to reform Fannie Mae and Freddie Mac, which are currently in government receivership and are continuing to lose taxpayers money. Experts believe that the largest loss taxpayers will suffer from government intervention in the financial crisis will be from Freddie and Fannie, yet the bill fails to make any changes in the way that the housing GSEs operate.

Source