Earlier today, Senate Banking Committee chair Chris Dodd held a press conference to undermine Obama’s authority and assert his own. At least, that’s what we think he was doing by making a pre-emptive claim to be the new big shot when it comes to financial regulation.
Dodd must feel a bit left out of the mix. As the chair of the Banking Committee he might have been expected to play a central role in the attempt to rescue our financial system. Instead, he’s been pushed out of the spotlight by Hank Paulson and Ben Bernanke. Even Timmy G. at the New York Fed has greater prominence than Dodd right now.
Since we all know that politicians are narcisists, it shouldn’t be that surprising that Dodd decided to get in the way of the news about Obama’s cabinet by announcing that he’s going to remain chairman of the Banking Committee, supports 21st century regulation and wants regulators to be the “strong cops” on the beat. It’s mostly blather and hooey, but it is fun to watch the Democrats already shoving each other around.
If you must, go ahead and read the full text of Dodd’s remarks.
I’d like to speak for a few moments about Tuesday’s elections, and about my plans to work with a new Administration and a new Congress.
First, allow me to put the events of this week in some context:
Less than a century and a half ago, Americans of African descent lived in the bonds of slavery. On Tuesday, the American people chose an American of African descent to lead our country.
Just over 40 years ago, well within our lifetimes, African Americans as a people were excluded – systematically and often violently – from participating in our nation’s political life. On Tuesday, they joined with others from across the racial, ethnic, regional, economic, and ideological spectrum to elect a man who personifies the freedom, equality, and opportunity that is the birthright and the hope of every American.
By any measure, Tuesday represents one of the most important moments in our nation’s long struggle to create that “more perfect union” about which our forebears spoke.
In January, I offered my support to Barack Obama in his candidacy for president. Earlier this week, I offered my congratulations to him as President-Elect.
Today, I am here to say that it is my intention to continue to serve as Chairman of the Banking Committee in the 111th Congress and to continue the important mission that we all share: to build a strong economy in which every American has the opportunity to succeed.
To be sure, there are several additional issues of great importance to the country and to me personally – issues I intend to continue to work on as a senior member of the Health and Education Committee, as well as the Foreign Relations Committee.
I’m looking forward to working with Chairman Kennedy when he returns in January to the HELP Committee. He and I have been in regular contact regarding the need to move quickly on legislation that ensures affordable, quality health care for all Americans, as well as our shared interest in renewing and improving the No Child Left Behind Act to provide a world-class education for every child.
I also look forward to working with the new chairman of the Foreign Relations Committee on the many urgent issues we face internationally – the wars in Iraq and Afghanistan, rebuilding our traditional alliances and friendships around the world, and our relationships with Russia, China, and the many emerging democracies eager for leadership and partnership with us.
The need to address these issues will be immensely important in the coming days.
But if, as President-elect Obama told the country the other night, “This is a defining moment in our history” – then putting our country back on a sound economic footing is our defining challenge.
Our economic crisis is the centre of gravity to which all our other problems are being pulled – and it will be “Ground Zero” when it comes to digging us out of the hole we are in.
We have been left with a terrible mess. Unemployment is rising. Incomes are stagnating – while at the same time the cost of health care, housing, education, and energy is skyrocketing. Millions of Americans are losing their homes. Tens of millions more are watching the value of their homes – their chief source of financial security as well as residential stability – plummet by amounts never before seen.
Every day for the past several weeks, an average of 44 families in my state enter foreclosure – some 16,000 in all. 30-five of its workers lose their jobs.
Countless men and women – in Connecticut and across the country – sit around their kitchen tables at night, worrying about what might happen next. They ask themselves, “Will I lose my job?”
“Will I be able to keep my home?” “Will I be able to provide for my family – put food on the table, send my kids to good schools? Save a little for my retirement?”
Finding answers to these questions is not just the private worry of our citizens. What this election affirmed, I believe, is that is also the preoccupation of we those serve our citizens in public life. If we are going to be strong in the world, we must be strong at home. And in order to be strong at home, we must ensure that American capitalism – the greatest engine of economic growth the world has ever known – continues to create a strong foundation of growth and prosperity upon which Americans can achieve their highest aspirations for a secure and meaningful life.
As a United States Senator from Connecticut, there is no more important way right now that I can serve the people of Connecticut and our country than as Banking Committee Chairman. In this role, at this moment, I am confident I can do the greatest good for our nation – and create lasting change for millions of Americans.
Already, in 22 months during which I have served as Chairman, we have made important progress for our people.
We have held 75 hearings and markups – most of which have been focused on diagnosing and remedying our nation’s economic troubles.
Working with Senator Shelby and other Committee colleagues, we have passed important legislation to keep our nation strong and secure. That includes legislation on terrorism insurance, foreign investment, transit security, currency manipulation, student lending, sanctions against Sudan and Iran, rental housing, home ownership, and reform of the housing government-sponsored enterprises. Working with Senators Reed, Bennett, Schumer, Corker, and others, we also passed the Emergency Economic stabilisation Act to help contain the current crisis that continues to threaten our economic stability and security.
Through aggressive oversight, the Committee has played a constructive role in reforming credit card marketing and billing practices – by encouraging new rules by the Federal Reserve, and new practices by some of the country’s largest credit card issuers. Similarly, the unrelenting focus by Members of the Committee on predatory mortgage lending practices has spurred the Fed to finally promulgate rules under the 1994 Homeowners Equity Protection Act.
The record is clear: We have made important progress in addressing pressing economic priorities. But just as clearly: our work is far from finished. Allow me to lay out what I believe that work should entail.
First and foremost, we have important work to carry out this year in order to help prepare for next year. That includes continued oversight of the Administration’s implementation of the Emergency Economic stabilisation Act. We had Administration officials before the Committee two weeks ago. Next week, we will hear from lenders and others as part of our vigilance to ensure that taxpayer dollars are being used for the taxpayers’ benefit –reducing foreclosures, spurring new lending, and reining in excessive executive compensation.
Secondly, I have pledged to President-Elect Obama to work closely with him and his transition staff to identify and consider the members of his economic team as quickly as possible. This can be no ordinary transition. Six weeks ago, our economy teetered on the precipice of collapse. Although we have seen some hopeful signs since then, by no means are we out of danger. The new Administration will have no more urgent priority than putting a team of capable, experienced and qualified economic leaders swiftly into place. That includes personnel at the Treasury Department, the Federal Reserve, the SEC, the Council of Economic Advisors, the Department of Housing and Urban Development, the Federal Housing Finance Agency, and other agencies.
Third, the primary legislative focus of the Committee must and will be to modernize our nation’s framework of financial regulation. If we are going to regain the confidence of investors, consumers, and businesses here at home and around the world, they must have confidence that our financial institutions are properly capitalised, regulated, and supervised.
In the remaining weeks of this year, and into next year, we will execute an ambitious schedule of meetings, briefings, and hearings to understand the strengths of our regulatory system and address its weaknesses. We will welcome diverse parties and points of view. The Committee’s inquiry and deliberations will be guided not by pre-conceived notions, but by several core principles that must be reflected in any comprehensive reform effort. These principles include the following:
One, regulators must be strong cops on the beat, rather than turn a blind eye to reckless lending practices. As Alan Greenspan himself conceded just days ago, it’s become clear that the markets alone cannot be entrusted to police themselves. The consequences for taxpayers are just too great to allow significant market actors to carry out their activities in an un- or under-regulated environment.
Two, we need to remove negative incentives for regulators to compete against each other for bank and thrift “clients” by weakening regulation. We cannot have a system that encourages charter-shopping and a regulatory race to the bottom in an attempt to win over institutions. Regulators should not have to fear losing institutions, and thus the source of their funding, by being good cops on the beat.
Third, we need to ensure that regulators are aware of risks that the institutions they supervise are taking and effectively control them, so that they do not imperil the financial system. All institutions that pose a risk to our financial system and taxpayers must be carefully and sensibly supervised. This responsibility could reside with a single regulator or multiple agencies. In either case, it is clear that communication and information-sharing among agencies must be streamlined and improved.
Fourth, we need more transparency in the financial system. Market participants need information about the risks they’re taking. We cannot afford to have trillion-dollar markets where there is little or no information about who owns or owes what. And we cannot afford to have regulators in the dark about the risks posed to and by the institutions under their watch.
Fifth, we need to ensure that our actions tackle not only the problems of yesterday and today, but also the challenges of tomorrow. Our goal should be nothing less than to create a 21st century financial architecture – that spurs competition, and strengthens the ability of every sector of the financial industry – to succeed in a competitive global marketplace.
I have great faith in American markets. With proper oversight, referees and cops on the beat, they are the best in the world. But if we’ve learned nothing else from this crisis it’s that government must play an essential role to restore confidence to them.
Last but certainly not least, we need to accept the fundamental premise that consumer protection and economic growth are not in conflict. On the contrary, they are inextricably linked. If we learn nothing else from this crisis, it is that the failure to protect consumers can wreak havoc on the financial system. Predatory practices against individual consumers have not only devastated those individuals’ lives. They have also caused the collapse of our largest financial institutions, the loss of hundreds of thousands of jobs, and the evaporation of hundreds of billions of dollars of wealth from the investment accounts of hardworking Americans. Consumer protection should be on an equal footing with supervisions that ensures the safety and soundness of our financial system.
And in this Committee, it will be. That means stronger protections in mortgage lending, credit card lending, investor rights, and other areas. Instead of treating consumers a tools to create wealth for Wall Street, consumers should be given the financial tools they need to create wealth for themselves, benefiting us all.
Regulatory modernization, including consumer protection, will be our first legislative objective. But by no means will it be our exclusive objective. Next year, Congress is scheduled to reauthorize the surface transportation statute. This Committee will play a critical role in that effort by reauthorizing the transit provisions of that law. Transit has never been more important to the future of our economy. It can play a role in solving some of our most pressing problems – from improving economic growth, to reducing congestion, to helping American families deal with higher gas prices, to reducing pollution and global warming. I look forward to working with Sen. Shelby and our other colleagues to ensure that we craft a transit bill that meets these critical national challenges.
We must also closely examine the regulatory and oversight framework for new carbon markets to be established under climate change legislation expected to come before the Senate next year, and ensure that such markets are transparent and free of fraud and manipulation, with strong enforcement mechanisms.
We need to focus renewed attention on the housing needs of our people. The foreclosure crisis has understandably been a primary preoccupation. But the crisis in rental housing continues unabated, as well. As winter approaches, we would do well to remember that, on any given night, up to one million Americans are living on our streets and in our shelters. Millions more live on the edge of homelessness. Seventeen million households spend more than half of their income to put a roof over their heads. Safe, affordable rental housing is not a luxury. And it is an absolute necessity if we expect our children to learn, their parents to work, and our economy to grow. If we can dedicate billions of dollars to propping up the nation’s largest financial institutions, surely we can find the will to support Americans working to keep a good home.
We also must continue to focus on those parts of the Committee’s jurisdiction that relate to our national security. This includes doing everything possible to identify and root out funding sources for terrorist networks – including breaking up drug trafficking and money laundering operations used by narco-terrorists in places like Latin America and Afghanistan. Chairman Shelby has vast experience in this area – including as a result of his service on the Intelligence Committee.
As we confront the realities of a global marketplace, with manufacturers assembling complex machinery from a supply chain spanning the globe, and regimes trawling various trans-shipment hubs for parts to assemble high-tech weapons, we must also do everything we can to prevent the illegal diversion of sensitive technologies. I intend to work with my colleagues to ensure that our government is, to the maximum extent possible, depriving terrorists of the means to finance their activities, and preventing rogue regimes from engaging in weapons proliferation.
We will also look to reauthorize the defence Production Act. This critical law requires our government to ensure that our economy is able to produce the goods and services needed to strengthen our nation’s military and critical infrastructure. Seven years after 9/11, we still live in a dangerous world. Our military has been stretched to the limit as our men and women in uniform continue their heroic service in Iraq and Afghanistan. At the same time, our manufacturing base continues to hemorrhage jobs – including jobs in defence-related firms. The implications of these job losses on our national security are difficult to overstate. We must do all we can to reverse them.
In sum, then, I look forward to working with President-Elect Obama, with Senator Shelby, and with my other Committee colleagues to address some of the most critical economic and national security challenges facing our country.
I agree with President-elect Obama – this is a defining moment in our history. With the work this committee will do in the coming weeks and months, I intend to help us seize this moment to put our nation on a more secure and prosperous path.
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