February 26, 2009

With an eye on preventing future shocks to the American economy and improving the nation’s ability to compete on a global stage, the New Democrat Coalition announced its plan for regulatory reform of the financial services industry.

President Obama has said that new “rules of the road” for our financial system are critical to preventing another steep recession like the one Americans are experiencing now. The pro-growth New Democrat Coalition, a group of 67 centrist House Democrats, has been working closely with the Obama Administration and Financial Services Committee Chairman Barney Frank to determine a broad framework for reform to our outdated regulatory system to ensure effcient and effective regulatory oversight, enhance market stability and transparency, and provide for robust consumer and investor protection.

“After directing $700 billion to shore up our credit markets because Wall Street made bad bets, it’s clear that the referees who regulate our financial system were pulled off the field,” Congresswoman Ellen Tauscher (CA-10), the chair of the New Democrat Coalition, said. “We need to come up with a plan to put into place sensible, new regulations that are modern, adaptable and don’t hinder commerce.”

The New Dems released their 21 principles for regulatory reform at a Capitol Hill press conference Thursday. The New Dem Financial Services Task Force, co-chaired by Reps. Melissa Bean (IL-08) and Jim Himes (CT-04), crafted the principles, which will guide New Dem strategy on crafting legislation for the coming year.

“Regulatory reform may not be glamorous, but it is vitally important to creating a functional, sustainable financial system that families and businesses can count on,” Rep. Bean said. “We must avoid future breakdowns that jeopardize the value of our pensions, our homes, our businesses and our national economy.”

“We need a vibrant, innovative, and American financial services sector lending to our families and businesses, but we need to assure that taxpayers never again shoulder the burden of a private company’s risk,” said Congressman Himes. “Those who take risk should gain the benefit and bear the losses of their decisions.”

As a caucus dedicated to restoring economic growth and improving America’s ability to compete in a global economy, the New Dems know the value of a smoothly functioning financial system to our small businesses and economy. With 16 members on the Financial Services Committee and many Members with private sector financial experience, the coalition has the expertise and the will to help Chairman Frank and the Administration guide a regulatory reform agenda through Congress.

“As a scientist and businessman, I appreciate the complexity of our financial situation and know firsthand the challenges business owners face,” said Rep. Bill Foster (IL-14). “Appropriate and thoughtful regulatory reform will be essential to restoring credit and instilling confidence in our economy.”

Rep. Ed Perlmutter (CO-07) stated, “An important part of turning our economy around is reforming how regulators evaluate capital requirements when using fair market accounting values (mark to market) to give regulators the flexibility to look at the actual value of the asset when setting up their capital reserve requirements. This will ensure our financial markets are flexible enough to respond to changing market conditions while protecting individuals, families and small businesses.”

“I am proud to join my New Dem colleagues in announcing our principles of how best to move forward in reforming the financial regulatory system,” said Rep. Dennis Moore (KS-03). “We should closely examine the actions and breakdown of our regulatory structure that led to the financial meltdown, and develop an improved system that will effectively regulate and supervise financial institutions and transactions to protect consumers, investors and taxpayers.”

"The regulatory reform principles laid out by our task force are designed to ensure that hard-working Floridians are not penalized for a lack of responsibility and accountability by Wall Street,” said Congresswoman Suzanne Kosmas (FL-24). “We need effective regulation that protects consumers and promotes financial stability and transparency. By addressing the root causes of our financial crisis, we are helping working families and retirees who depend on credit and a stable market.”

“I represent thousands of constituents who have lost their jobs on Wall Street due to the financial crisis. One of my top priorities for my constituents, my City and our Nation is to help the financial service industry rebuild, rebound and provide capital for American families. It doesn’t just matter on Wall Street, it matters on Main Street. We can do this smartly, with strong and smart regulation which cracks down on predatory lending, reduces duplicity in oversight bodies and increases transparency in both the market and for consumers. The New Democratic Regulatory framework announced today is the step in the right direction. It is strong, it is streamlined and it is designed to protect consumers and the American taxpayer by demanding oversight and ensuring that what we are experiencing today in our markets will not happen again,” said Congressman Michael E. McMahon (NY-13).

“The New Democrats’ plan for financial regulatory reform offers real and practical steps toward fixing our beleaguered system,” said Rep. Carolyn McCarthy (NY-04). “This bold agenda sets a course that will begin to right the ship and reign in the practices that contributed to the failures in our economy. We need to take serious action to develop comprehensive reform in order to bring our nation’s economy back to prosperity.”

“The root of the current recession is the crisis in the housing markets, and the root of the housing crisis is excessive risk taking and a lack of proper oversight,” said Rep. Gary Peters (MI-09). “These common-sense reforms will help ensure we prevent future crises like the one we currently face. Changing compensation policies that create incentives for irresponsible risk is a critical component of these reforms. We cannot allow the current system that rewards the reckless behavior that got us in this mess to continue.”

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