Last week, in the dead of night, the US Senate passed tax handouts for millionaires and multinational corporations that ship American jobs overseas. This week, it’s the banks’ turn.
On Tuesday, the Senate Banking Committee will consider the Economic Growth, Regulatory Relief, and Consumer Protection Act, legislation to roll back Dodd-Frank reforms Congress passed in the wake of the 2008 financial crisis — reforms meant to protect homeowners, taxpayers, and our economy from ever again paying the price for Wall Street greed.
By rolling back those protections, this bill puts taxpayers at risk of another bank bailout and puts homeowners at risk of the same traps that led to the foreclosure crisis — all while doing little for hardworking families. This is a missed opportunity to help Americans burdened with student loan debt, homeowners in underwater mortgages or workers who haven’t had a raise in years. Instead, this bill helps banks of all sizes, which, in 2016, were raking in record profits.
Dodd-Frank instituted stress tests to ensure that banks can weather the next downturn without putting our economy at risk. Stress tests are one of the most effective tools we have to prevent taxpayers from being asked to bail out banks once again. This bill weakens those tests for all large banks, even Wall Street megabanks that are designated as “global systemically important banks”– meaning their collapse could cause harm that ripples across the world.
Together, these banks took about $239 billion in taxpayer bailouts last time around. And without rigorous, annual stress tests, taxpayers could once again be on the hook if these “too big to fail” banks collapse and we don’t have the right tools in place to see it coming.
We wouldn’t trust our families’ health to doctors who only passed dumbed-down board exams. So why would we trust the health of our economy to banks that only passed weakened stress tests?
This bill further weakens accountability measures for other large banks, which hold $4 trillion in combined assets, or more than a quarter of all assets across the entire banking industry. And it weakens oversight of foreign megabanks operating in the US, some of which have track records of breaking US laws — from illegally repossessing vehicles of military members, to manipulating interests rates that impact American homebuyers, to doing business illegally with countries like Iran.
Regional and community banks provide critical services to homeowners and small businesses. I support efforts to help those banks fill important needs in cities and towns around my home state of Ohio and across the country. I do not support efforts to roll back accountability measures on the largest banks with nothing to help hardworking Americans who have the most to lose.
In the first half of 2007, my zip code, 44105 in Cleveland, had more foreclosures than any in the United States. But we weren’t alone. Millions of families across the country were forced to make impossible decisions and have painful conversations in 2007, 2008 and 2009.
I imagine those conversations when I consider that this bill could allow some banks to sell adjustable rate mortgages they know customers can’t afford, takes away the rights of some customers to go before a judge to block a wrongful foreclosure, and rolls back protections that help ensure customers can afford the true price of homeownership.
We can’t go back there. The stakes are too high.