Senator John ThuneBanks and other financial institutions play an important role in our economy and in the day to day financial needs of South Dakota families. Most of us who have bought a home or even a car have borrowed money from a financial institution, and we trust them to act responsibly with our hard-earned money. Given the importance of protecting Americans’ money and investments, banking regulation reform is an important issue for Congress to address carefully.
South Dakota was somewhat insulated from the housing bubble and the excesses on Wall Street, but I believe that the financial regulation system in this country is in need of reform. The financial institution failures of 2008 and the disorganized, costly government response were proof that the current federal regulatory system is not up to the complexities of today’s financial system. Meaningful reform is necessary to protect taxpayers and anyone who uses a financial institution.
Recently, the Senate Banking Committee passed a financial regulation bill on a party line vote after Republican committee members were prohibited from offering amendments. Unfortunately, the bill does not fully close loopholes in the “too big to fail” doctrine that lead to taxpayer-funded bailouts. Without ending “too big to fail,” American taxpayers will continue to be the backstop for risky decisions made by banks and financial firms.
The ultimate goal of financial regulation reform should be stronger protections for consumers. When South Dakotans trust banks with their money, the banks have an obligation to protect it. The government’s role is to ensure the banks and financial firms live up to that promise. While Congress must enhance certain consumer protections, it must be coupled with attention to the safety and soundness of the system.
Instead of more regulation for regulation’s sake, financial reform must be smart and targeted to the real problems that led to the financial collapse of 2008. The Banking Committee bill does not go far enough in ending the concept of “too big to fail” and addressing issues associated with the housing market.
Obstinate partisanship did not result in any improvements to the recently enacted health care reform bill, and it will not work for financial regulation. Members of Congress from both parties need to actively engage on crafting smart reform for this system which deeply affects every American citizen. I believe there is a great deal of common ground to be found on financial reform, but we must work in a bipartisan manner to make it happen. The taxpayers cannot afford Congress getting this wrong.