By Lew Prince
I’ve owned a small business in St. Louis for 31 years. Like most of my customers and my 26 employees, I watched as greedy hedge funds, irresponsible investment banks and unscrupulous mortgage companies decimated our savings, investments and pension funds, and nearly drove our country into another Great Depression. Now those same hedge funds, investment banks and mortgage companies are spending more than $1.4 million dollars a day (that’s right – a day) to scuttle financial reform legislation in the U.S. Senate.
What’s the financial industry so afraid of?
Well, there’s the Consumer Financial Protection Agency (CFPA), which passed the U.S. House of Representatives but is under siege in the Senate. The CFPA would make sure banks, mortgage companies, payday lenders and car dealers lay out loan terms in plain language so individuals, families and businesses will know what they’re getting into when they borrow money. It would set clear ground rules for loans, protecting Americans from the kinds of sleazy deals that cost so many people their homes and livelihoods in the wake of the recent Wall Street collapse. And it would actually reduce government bureaucracy by streamlining and combining all federal consumer loan regulations under one roof.
The financial meltdown has shown us how greedy and unscrupulous operators can disrupt the flow of credit and bring our economy to its knees. A consumer protection agency would protect my customers, my business and the economy, keeping responsible lenders from having to compete with sleazy credit hustlers. Common-sense regulation will free money to flow to responsible borrowers, protect the value of our savings and pension funds and direct our nation’s financial resources toward job creation and the return of our national prosperity. That’s why I joined with hundreds of business owners around the country in signing a Business for Shared Prosperity statement in support of a strong, independent Consumer Financial Protection Agency.
The financial industry lobbyists want the senators they’ve been wining and dining to keep loan regulation in the hands of the same banking regulators that let money-crazed investment bankers nearly destroy our economy. Does that make sense to you?
Another provision that has the financial lobbyists up in arms would bring derivatives trading out of the shadows and into a regulated, transparent exchange. Reckless derivatives gambling led to catastrophe, and will again without tough new regulation.
Another financial reform provision that should be strengthened — not weakened — is the language separating risky investments and commercial banking. Banks should not be able to keep gambling for their own profits and executive bonuses while also benefiting from the Federal Deposit Insurance Corp. (FDIC) and subsidies, like access to the Federal Reserve discount window.
We need to get banks out of the Casino Economy and back into the business of lending to America’s true wealth creators: working people and small businesses. That’s how to get real economic growth.
Wall Street lobbyists succeeded this week in defeating the Brown-Kaufman amendment, which would have capped the size and leverage of our largest banks so they could be wound down when they fail without sinking the economy. They also succeeded in stripping a dissolution fund for investment banks from the legislation, which would have worked like the FDIC bank-paid resolution fund that protects depositors when a bank fails.
Taxpayers were stuck with cleanup costs for the financial crisis. Banks, not taxpayers, need to pay for future crises. Maybe I’m crazy, but it only seemed fair for us to ask them to take money out of their bonus pot to pay their insurance premiums.
Congress could redeem itself by supporting a permanent bank tax to offset the direct and indirect costs of the financial meltdown and discourage the kind of risk-taking that tanked the economy. This is no radical idea. The International Monetary Fund supports it.
Strong financial reform will help small-business owners by providing the kind of stable financial environment in which small businesses can thrive.
Politicians love to point out that most new jobs are created by small business. Senators should listen to the business owners who know the difference between gambling and investment, who didn’t wreck the economy and who want real reform to prevent a repeat.
Prince is managing partner of Vintage Vinyl Inc. in St. Louis.
Copyright (C) 2010 by the American Forum. 5/10.
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