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Posted by: thepinetree on 06/30/2010 10:13 PM
Updated by: thepinetree on 06/30/2010 10:13 PM
Expires: 01/01/2015 12:00 AM
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Lungren: Financial Overhaul Misses The Mark
Washington, D.C. –Congressman Dan Lungren (R-Gold River-CA) released the following statement after his vote against the Conference Report on the Financial Regulation legislation today. The bill is a tragic missed opportunity to take meaningful action to stabilize our financial system and to prevent another financial catastrophe in the future. .....
“First and foremost, the Conference Report should be noted for what it does not include. The Failure to address the problem of Fannie Mae and Freddie Mac is best described by former Clinton Administration SEC Commissioner, Arthur Levitt as being “without excuse.” The role played by these government sponsored enterprises in igniting the housing crisis is left unaddressed by this bill. In fact, these enterprises continue to be the beneficiaries of an ongoing federal bail-out. The federal government has already injected over $145 billion of taxpayers money into these two companies and the Congressional Budget Office estimates that the ultimate cost could continue to rise as high as $380 billion. The absence of any effort to address this mounting catastrophe is nothing short of a national disgrace.
“To add insult to injury, the financial regulation bill continues the approach to our nation’s largest financial institutions which led to the financial crisis. Giving the federal government the power to determine which financial institutions present “systemic risks” will further distort the financial system towards the “big banks.” Institutions whose failure would be considered to be a threat to the economy will be deemed to have an implicit federal guarantee while their smaller competitors will not.
“In this regard, the outcome of this legislation may not be so bright for smaller community banks. As Sarah Wallace, chair of the board of directors of First Federal Savings and “Loan Association described the bill: “Creditworthy borrowers will be denied loans as small banks devote more and more energy to regulatory compliance.”
“One of my major concerns with the legislation is that it will create regulatory bottlenecks which will impede lending at a time when our economy is fragile and unemployment in the 3rd Congressional District is in double digits. Mark Zandi has advised both Republican and Democratic policymakers He predicts the bill will reduce credit to business and households by $80 billion a year.
“Does this sound all too familiar? Unfortunately, the reliance on the political system rather than the discipline of the market place may ultimately distort economic outcomes. Failing financial institutions should face expedited bankruptcy proceedings rather than the bill’s resolution authority designed by politicians and run by a newly created federal bureaucracy.
“This Conference Report on financial regulation is simply the wrong medicine and a missed opportunity to provide for meaningful financial reform. It fails to address the major causes of the financial collapse and I fear that it takes us down a road that we have traveled before.”
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