254 Groups Warn Congress Against Financial Deregulation Riders by AFR
Dear Members of Congress,
We, the undersigned organizations, write to urge you to oppose any funding bills that include provisions rolling back or undermining financial reform. At the end of last year Congress wisely rejected multiple efforts to use the budget process to force through unrelated ideological riders, including changes in financial regulation that would undermine consumer protections, endanger financial security, or reduce accountability for big banks. It is vitally important that members remain committed to opposing such riders again this year.
Wall Street-driven financial deregulation and out-of-control compensation that incentivized excessive, short-term risk-taking led to the economic meltdown of 2008. Taxpayers picked up the tab for Wall Street’s recovery, but everyday Americans are still struggling with the devastating effects of the crisis. The good news is that is that since 2008, reforms have been put in place that have begun to protect consumers and reduce the risk of another catastrophe. Among the shining examples of that reform has been the creation of the Consumer Financial Protection Bureau (CFPB). CFPB enforcement activity has secured more than $11 billion in relief for more than 25 million consumers and their rulemaking and supervision are making markets safer and fairer for hundreds of millions more.
Other reforms included in the Wall Street Reform and Consumer Protection Act (Dodd-Frank) have begun to reduce the systemic risks that led to the last crisis. These reforms restrict irresponsible and excessive borrowing and risk-taking by financial institutions, and are particularly targeted at the largest Wall Street banks and financial institutions.
New advances are also being made in protecting the retirement savings of American families. The Department of Labor (DOL) will soon finalize a conflict-of-interest rule that will protect workers against misleading advice designed to steer them into investments that benefit the broker instead of the client. The White House Council of Economic Advisers estimates that conflicted retirement advice costs ordinary savers $17 billion annually.
In spite of the importance of these reforms, and their broad popularity, some members of Congress are likely to once again attempt to use the appropriations process to roll them back, using backroom deals to put the public interest at risk and deliver a wish list to narrow Wall Street interests. Last year, we saw numerous attempts to undermine key financial reforms through “policy riders” that slip controversial policy changes into must-pass funding legislation. For example, the House Appropriations Committee’s 2016 Financial Services and General Government (FSGG) appropriations bill included a provision to remove independent funding for the CFPB, a limitation not placed on any other bank regulator.3 In the Senate, the Appropriations Committee approved a 2016 appropriations bill that incorporated over 200 pages of non-appropriations legislation attacking Dodd-Frank, including rollbacks of crucial protections affecting everything from risk management at giant financial institutions to safeguards against the kinds of toxic subprime mortgages that caused the financial crisis.4 And last year both the House and Senate Appropriations Committee passed legislation that included a rider that would have blocked new rules to protect retirement savings from conflicts of interest.
Fortunately, the full Congress eventually turned back these efforts. We urge you to again stand strong against such backroom strong-arm tactics this year. It is the right thing to do for the economy, and it is strongly supported by the public. In one 2015 poll, nine out of ten likely voters agreed on the importance of regulating financial products and services in order to make sure consumers are treated fairly. Two-thirds of Americans, according to another recent poll, believe we need more regulation of the financial industry, not less; and as the Washington Post commented, “that stance is near universal: there’s no large variation by gender, race, age and education level.”
After the terrible lesson of the financial crisis, the least we can expect is that any proposals to weaken financial regulations be debated and voted on as stand-alone measures in an open process. The budget is not the place to try to force through provisions that are dangerous to economic stability, would not pass alone, or that the President would likely veto.
We strongly urge Members of Congress and Senators to oppose any flawed funding proposals that undermine the CFPB, the Dodd-Frank Act, the DOL’s conflict-of-interest rule, or other financial reform and accountability legislation or regulations.
Alliance for a Just Society
Allied Progress American Association for Justice
American Federation of State, County and Municipal Employees (AFSCME)
Americans for Financial Reform
As You Sow
Center for Digital Democracy
Center for Effective Government Center for Global Policy Solutions
Center for Popular Democracy
Center for Responsible Lending Committee for the Fiduciary Standards
Communications Workers of America
Consumer Federation of America
Consumers for Auto Reliability and Safety Corporation for Enterprise Development
The Leadership Conference on Civil & Human Rights
Main Street Alliance
financial deregulation – See full PDF below.