Guest Column – Standing up for your families against Wall Street

By U.S. Representative Lloyd Doggett
GUEST COLUMN, SPECIAL TO THE POST-REGISTER

If you are mugged on the street, you’ll lose the content of your wallet, but if you are mugged by Wall Street, you can lose the savings of a lifetime. The new Wall Street Reform and Consumer Protection Act that the U.S. House of Representatives recently passed arms families with mo

re ways to protect themselves. While this bill should have done more, much more, about those Wall Street interests that are paid too much, taxed too little, and whose immense power continues to threaten our economic stability, this bill is a modest but important step toward preventing future bailouts.

The 2008 Crisis
If Wall Street bankers were as careful and conscientious as Caldwell County’s community bankers, the big banks would never have asked for a bailout. Unfortunately though, just before Halloween in 2008, our Nation experienced a financial crisis that was all trick and no treat. Credit card markets froze. Substantial savings were wiped out-folks were loath to open their quarterly reports lest they read that their 401(k)’s were only worth about 1K. Families watched ‘Foreclosure’ signs and credit card balances go up. In a little more than three months, five trillion dollars of Americas’ household wealth evaporated and banks refused to lend to our communities’ small businesses-the backbone of our economy.

Voting Against the Bank Bailouts
Unlike Wall Street CEOs, most folks don’t have golden parachutes. I repeatedly and vigorously opposed all bank bailouts, whichever President proposed them, in part, because they did not provide adequate protections for taxpayers. I demanded that those who caused this crisis should bear the brunt of the clean-up costs. This was not really a question of action or inaction. Of course we needed to act, but we need to act responsibly to really get our economy moving again.

Whether negotiating for a new car or a new house, you have to be able to say “no” to a bad deal-the rule is no less true when almost a trillion dollars of taxpayer dollars is at stake as it was on the bank bailouts.

Protecting You from a Bad Deal
That concern for protecting taxpayers is what makes this new bill such an important step. That, and the countless Central Texas families who have told me about sudden increases in their credit card interest rates, immediate drops in their credit limits, impossible-to-understand contract terms, and high and hidden fees.

One of our neighbors told me that his interest rates were hiked from 11 percent to nearly 30 percent, tripling his annual payments. And, cases like this one are not isolated. In fact, according to a Pew Charitable Trust study released in October, the twelve largest credit card-issuing banks were continuing to use “unfair or deceptive” practices. Interest rates on credit cards increased by an average of 20 percent last year.

Putting a Cop on the Beat
Whether it is the street in front of your home or Wall Street, to protect us from ne’er-do-wells, we need an effective cop on the beat. This Wall Street reform puts in place the common-sense rules to ensure Big Banks and Wall Street can’t play games with our hard-earned money. These reforms are not targeted at our reliable community banks and credit unions, they are not the cause of the crisis, and are treated differently by these reforms than big banks. The AARP says that this offers ‘new tools to combat investment scams targeted at older adults’ and hold[s] scam artists accountable.” The Consumer Federation says these reforms will “improve the marketplace for consumers and investors.”

What the Bill Does
This bill arms families with more ways to protect themselves-with information they need for more informed financial decisions. It provides protections from questionable – often outrageous – financial industry practices; prevents onerous, hidden fees that have plagued credit-card holders and borrowers across America; and creates a new hotline to report misconduct.

The newly created Consumer Financial Protection Bureau will offer help against unscrupulous mortgage promoters, foreclosure scam operators, and payday and student lenders. I have met several times with former University of Texas law professor Elizabeth Warren, with whom this idea originated. Professor Warren now serves as chair of the Congressional Oversight Panel, charged with monitoring the bank bailout. With so much already done to protect Wall Street, it is time we enacted meaningful consumer protections.

We Will Emerge Stronger
The DOW Jones growing again does not mean America has emerged from its significant economic problems. Notably, the national debt, which surged under President Bush and has grown as President Obama worked to avert the recession from sliding into a serious threat to our security. Hard choices to fully rebuild our economy remain. As American author Henry Miller once said, “In this age which believes there is a short cut to everything, the greatest lesson to be learned is that the most difficult way is, in the long run, the easiest.”

Restoring discipline, supervision, accountability and transparency will only be opposed by those who unfairly profit at the expense of working and retired Americans. Whether it’s savings for a soon-to-be college student, an investment in a home, or a retirement nest egg, this bill will provide greater security and peace of mind.