By Ben Chandler, Sixth District Congressman
The world has been waiting for two years to see big Wall Street banks held accountable for plunging Kentucky, the nation, and the world into a financial crisis. And today, after the passage of the financial reform bill, we are still waiting.
A number of Kentuckians were greatly harmed in the wake of the crash of September 2008. They lost their homes, their savings, and their jobs because for years Wall Street banks went unchecked and unregulated. Big banks got greedy, they dodged regulations, and were allowed to grow and expand, becoming “too big to fail” and putting our entire financial system at risk.In an editorial last Sunday, the Herald-Leader called the financial reform bill disappointing, and said that the bill “fails to adequately address a couple of issues that were at the heart of the worst economic collapse since the Great Depression.”
We need a strong reform bill that protects our people, ends excessively risky investments, and cuts big banks down to size. The intentions of the reform bill were good, but after two years in the making, this important bill fell short.
In the end, we were left with legislation which was full of holes and exceptions, did nothing to break up Wall Street banks, and did nothing to end the culture of greed, multi-million dollar bonuses, and golden parachutes for CEOs. Banks will still be able to use volatile derivatives and invest in risky speculative hedge funds, which could put billions of taxpayer-backed money at risk.
Instead of passing laws to place strict limits on these institutions, separating banks from insurance companies, or creating caps on size, the legislation merely gives more and unprecedented power to the same government bureaucrats who saw the warning signs before the economic crash, but did nothing.
And to top it all off, this bill adds stress to our local economy by placing irrational burdens on our small Kentucky banks. These institutions did not cause the crisis and will be a large part of the recovery, as they lend to small business that create local, good-paying jobs. Instead of punishing the big banks which caused this crisis, our small community banks will be paying the price.
The financial reform bill truly was a disappointment and left us with few protections, few changes to the system, and no assurances that we have fixed the problem and can prevent this crisis from happening again.
Big Wall Street banks duped the American people, and in return they got a taxpayer-funded bailout (which I strongly opposed), and a slap on the wrist from this legislation. A slap on the wrist isn’t going to cut it. In fact, Wall Street banks are already figuring out ways to get around the new rules and are back to their old tricks.
We need to see actual reform, like the SAFE Banking Act, legislation to break up massive Wall Street banks which I sponsored in the House. We need to see caps on bonuses, an end to rampant greed, protections for small community banks, and consequences for those who caused the crisis. It is time to see some real action taken to make sure that this never happens again