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Wall Street Reform

Reuters: U.S. Banks enjoy 'too-big-to-fail' advantage: Fed Study

The 2008 financial crisis and Great Recession destroyed 8.8 million jobs and $19.2 trillion of household wealth. Although many factors contributed to the financial crisis, the truth is Wall Street's greed led to the greatest economic crisis since the Great Depression. What is just as troubling is that our regulatory system let it happen.

Why did we let banks engage in subprime lending? Where were our regulators protecting consumers from predatory lending practices? Why did no one put a stop to big banks selling mortgage securities that were never examined and known to be defective? The answer is greed.

The response by Congress to the 2008 financial crisis has been woefully inadequate. I voted consistently against the Wall Street bailout.

What's more, the subsequent Dodd-Frank legislation failed to address the root causes of the financial crisis.

It did not: separate commercial banking from investment banking; end the "too big to fail" status of the largest institutions; rein in the credit rating agencies; require openness and transparency in the trading of derivatives; prevent Wall Street banks from replacing community banks; encourage prudent lending; strengthen support for those agencies finding and fighting fraud in our financial system; or, properly address the housing crisis.

Congresswoman Kaptur's legislation, the Return to Prudent Banking Act (H.R.129), would reinstate the provisions of the Glass-Steagall Act that keep investment banking separate from commercial banking. It would prevent the megabanks from engaging in speculative trading. It would also prohibit individuals from working for both an investment bank and a commercial depository bank.

Also, we must bring to justice those who engaged in illegal activity that contributed to the financial crisis. The biggest obstacle is not enough cops on the beat. Congresswoman Kaptur's bill, the Financial Crisis Investigation Act, (H.R. 131) would authorize hiring 1,000 agents and sufficient forensic experts to investigate financial crimes.

At the urging of the Ohio congressional delegation, the Committee on Financial Services held a hearing at Cleveland State University to examine some of the issues related to the foreclosure crisis and responses to it in the State of Ohio. You can review the hearing transcript here.


H.R. 790: Return to Prudent Banking Act of 2017. Congresswoman Kaptur's bill would reinstate the provisions of the Glass-Steagall Act to keep investment banking separate from commercial banking in order to preserve the stability of our financial system.


H.R. 130: Democratizing the Federal Reserve System Act. This bill cuts to seven years the time of service for a member of the Federal Reserve's Board of Governors (currently it is 14 years). Furthermore, it increases the post-service restriction on board members, barring them from holding any office, position, or employment in any member bank from two to four after their service on the Fed. Lastly, it changes the Full Open Market Committee voting structure to include each of the seven members of the Board of Governors and six of the 12 Federal Reserve banks one year, and the other six in the following year. This democratizes the committee that sets interest rates.

H.R. 131: Financial Crisis Criminal Investigation Act. This bill authorizes appropriations to the FBI to hire 1,000 agents as well as additional forensic experts to investigate corporate, securities, and mortgage fraud, and associated violations of law relating to the U.S. financial markets. It also authorizes the hiring also of additional employees by the Attorney General and the Securities and Exchange Commission to conduct related investigations and prosecutions.

H.R. 189: The Transparency and Security in Mortgage Registration Act. This bill prohibits Fannie Mae, Freddie Mac, and Ginnie Mae from owning or guaranteeing any mortgage that is assigned to the Mortgage Electronic Registration System, which was created by the banking industry to avoid paying registration fees at a county recorder's office when interests in a mortgage change hands. The bill was referred to the Committee on Financial Services.

H.R. 190: The Produce the Note Act. Congresswoman Kaptur's bill prohibits foreclosure proceedings unless the person commencing the foreclosure can identify the actual holder of the mortgage note to the satisfaction of the court. The bill also requires the person commencing the foreclosure to notify the mortgagor, in writing, not less than five days before any foreclosure action is begun. The bill was referred to the Committee on Financial Services.

H.R. 234: The Fannie Mae and Freddie Mac Investigative Commission Act. This bill establishes a commission to investigate actions taken by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) leading up to the financial crisis. The bill was referred to the Committee on Financial Services.