Statement of former U.S. Rep. Tom Davis (R-VA) on Senate Passage of Financial Services Reform

Contact: Chris Barron
(202) 286-4533

(Washington, D.C.) – Tonight, by a 59 to 39 vote, the U.S. Senate approved financial services reform legislation. In response, Main Street President and former U.S. Rep. Tom Davis (R-VA), issued the following statement:

“Tonight four Republicans joined Democrats in passing financial services reform legislation in the Senate. Like most Republicans, Main Street supports common sense reforms to our financial services sector – reforms that will protect consumers, stabilize our markets and prevent future financial crises.

“The legislation now moves to conference. We urge the House and Senate conferees to make changes that will make this bill more effective and ensure that this legislation will reform the financial services sector without threatening our economy.

“During this debate, Main Street advocated principles for bipartisan financial services reform. We urge conferees to consider these principles as they make final changes to this critical legislation.”

MAIN STREET’S PRINCIPLES FOR FINANCIAL SERVICES REFORM

1. We need a thoughtful, transparent and bipartisan process. Democratic leaders in both chambers should work with their Republican colleagues to draft a bipartisan financial services reform bill. Given the importance of the financial services industry to every aspect of our economy – the reform process should be open and transparent and should not be considered on any arbitrary, politically motivated timeline.

2. No new unnecessary bureaucracies. No independent “Consumer Financial Protection Bureau.” A fully independent agency will do little to protect consumers but could create a new and wholly unnecessary level of bureaucratic red tape.

3. No permanent bailout fund. The Senate Banking bill proposes to create a new $50 billion fund to be used in "emergencies" to close or restructure failing financial institutions or those perceived as being in danger of default. This creates a permanent TARP fund that can be used to prop up politically important industries.

4. Establishment of a Chapter 14 bankruptcy to deal with large, complex financial institutions. This new chapter will facilitate coordination between regulators and the courts to ensure technical and specialized expertise is applied when dealing with these complex institutions. Bankruptcy judges would also have the power to stay claims by creditors and counterparties to prevent runs on troubled institutions.

5. Creation of a market stability and capital adequacy board. The Board will be chaired by the Secretary of the Treasury and comprised of outside experts as well as representatives from the financial regulatory agencies responsible for supervising large, complex firms. This Board would be tasked with monitoring the interactions of various sectors of the financial system, and identifying risks that could endanger the stability and soundness of the system.

6. Reform of the Federal Reserve. Bring transparency and accountability to the Federal Reserve by directing the Government Accountability Office to conduct extensive audits. The plan refocuses the Fed on its core mission of conducting monetary policy by relieving it of current regulatory and supervisory responsibilities and reassigning them to other agencies.

7. Fannie Mae and Freddie Mac Reform. Phase out taxpayer subsidies of Fannie Mae and Freddie Mac over a number of years and end the current model of privatized profits and socialized losses.

8. Strengthen anti-fraud enforcement. Increase both civil and criminal penalties in government enforcement actions, maximize restitution for victims of fraud, improve surveillance of bad actors that prey on consumers, and allow regulators to share information with foreign regulators and law enforcement agencies engaged in the investigation and prosecution of violations of financial laws.

9. Improved Disclosure and Complaint Resolution. Expand the mission of the Financial Literacy and Education Commission to include consumer protection and disclosure issues by giving it the authority to direct regulated entities to disclose relevant policies, procedures, guidelines, standards and regulatory filings on their websites. Streamline the complaint process for consumers and investors.

The Republican Main Street Partnership (RMSP) is dedicated to promoting and building a pragmatic, thoughtful, fiscally conservative, and inclusive “Governing Majority,” where political debate is encouraged to promote solutions to improve the lives of all Americans. Embracing the full spectrum of center-right ideologies and values in order to build coalitions, RMSP is the largest organization of elected leaders who are in the mold of Abraham Lincoln, Teddy Roosevelt, and Ronald Reagan. For more information on RMSP, visit our website at www.republicanmainstreet.org.