Republican Main Street Partnership Unveils Principles for Bipartisan Financial Services Reform

Former U.S. Rep. Tom Davis (R-VA) – “Efforts to reform our financial services industry are too important to become just another partisan political issue.”

Contact: Chris Barron
(202) 286-4533

(Washington, D.C.) – Today, the Republican Main Street Partnership, the largest organization for elected centrists in the House and Senate, unveiled its principles for bipartisan financial services reform. “Efforts to reform our financial services industry are too important to become just another partisan political issue,” said former U.S. Rep. Tom Davis (R-VA), current President and CEO of the Republican Main Street Partnership. “We need to learn from the mistakes made during the healthcare debate and both sides need to focus on common-sense solutions that will protect consumers and stabilize our markets not on election year rhetoric.”

During the healthcare debate, Main Street worked with our centrist elected members to develop a set of bipartisan principles for reform. “Like with healthcare, there is broad consensus on a number of important reforms to our financial services industry,” continued Davis. “We believe strongly that it is time for our leaders in Washington to coalesce around those principles and pass a bipartisan bill.”

“The process by which we craft this legislation is almost as important as the policy it produces,” said Davis. “In the wake of the divisive, politcally poisonous healthcare debate, we need to prove to the American people that our elected leaders can rise above petty partisan politics and work together.”

“Republicans in both the House and the Senate have expressed a willingness to work with their Democratic colleagues to pass a financial services reform package that will protect consumers and investors, while at the same time not creating unnecessary bureaucratic red tape that will hamstring our economy during these tough times,” concluded Davis. “We implore Senator Dodd and the Democratic leadership in both chambers to put the best interests of Americans before election year politics.”

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 who 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.