CRC Statement on “Christmas in May” Shelby Bill Giveaway to Bank Lobbyists
May 21, 2015- San Francisco, CA- Today, California Reinvestment Coalition Executive Director Paulina Gonzalez released this statement about the party-line vote approving Senate Banking Committee Chairman Richard Shelby’s draft legislation, the Financial Regulatory Improvement Act of 2015.
“The California Reinvestment Coalition is incredibly disappointed to see that twelve senators on the Senate Banking Committee voted for this “Christmas in May” proposed legislation that would give major gifts to banks and other financial firms at the expense of everyday consumers.
California was ground zero for the mortgage crisis, with firms like Countrywide spewing out time-bomb mortgages that exploded on homeowners. We can’t understand why anybody would support a return to policies that ultimately resulted in millions of foreclosures across the country.
Dodd Frank was enacted to put a stop to reckless lending- but the Shelby bill would roll back Dodd Frank’s common sense rules requiring banks to actually underwrite their mortgages. As Americans for Financial Reform noted, under the Shelby bill, a broad swath of mortgages could be exempt from important ability to repay protections— even if they include abusive fees or balloon payments.
Worse, this draft legislation would require bank regulators to roll back prudential risk protections for 28 of the nation’s largest 34 banks. This includes banks with up to $500 billion in assets- banks comparable in size to the failed Washington Mutual.
This bill also calls for increasing the amount of paperwork and bureaucracy for the Financial Stability Oversight Council (FSOC) to designate a non-bank company for additional oversight.
We saw what happened with companies like AIG and Bear Steans in 2008, which is why we can’t understand why this bill would increase the already lengthy procedural requirements that the FSOC has to go through in order to designate these firms for more oversight. Our economy moves far too quickly for regulators to be stuck waiting for years to regulate firms that have the potential to destabilize our economy—yet again.
We have a number of other concerns with this legislation. It was just a few years ago when our country’ economy was nose-diving thanks to reckless bank practices.
While the banks are no doubt happy about the prospect of looser rules, the irony of this bill coming to a vote the same week as multi-billion settlements for banks engaging in illegal behavior is not lost on communities or taxpayers who have already footed the bill for bank’s previous shenanigans.
Some bank executives may feel “if you aint cheating, you aint trying,” but Americans have lost their patience with paying the tab for Wall Street’s cheating, and this bill moves us one step closer to picking up the tab again.”