Sen. Mike Johanns today issued the following statement in response to the recently released financial regulatory overhaul conference report:
“As we approach the two year anniversary of the near collapse of our financial system, I regret that this bill will not bring about needed reforms. I began this process hopeful that the dire circumstances of our financial markets would inspire real bipartisan reform, however it became clear over the past few months that the bill had fallen victim to partisanship and politics. New rules and regulations will punish community banks in Nebraska and throughout the country that had nothing to do with the crisis by impeding their ability to extend credit to Main Street businesses.
“I still have serious concerns that the derivatives language will drive transactions overseas and out of reach of federal oversight. The bill’s tighter restrictions on swaps will only increase the cost of hedging risk for those who use them responsibly.
“The bill creates a new government bureaucracy with unprecedented power to reach into every part of our economy. This vast new agency’s powers are virtually limitless because they are so vaguely defined with no clear checks. Many small banks across Nebraska will not have the resources to comply with all of the new rules and regulations and will have only two options: close shop or sell to a larger institution.
“The bill mandates that lenders ensure a borrower can repay a home loan by verifying income, credit history, and job status, but doesn’t require any type of down payment. I simply cannot understand such a glaring omission in the wake of the recent housing crisis. Subprime loans are what got us into this mess.
“Additionally, conference added a new $18 billion bank fee that will undoubtedly take precious capital out of the economy and increase the cost of borrowing for consumers. Let’s have no illusions, these new taxes will be passed on to consumers.
“Finally, the bill completely ignores two of the biggest culprits in the financial meltdown, Fannie Mae and Freddie Mac, which played an enormous role in the housing meltdown and have since received billions in taxpayer-funded bailouts. Fannie Mae and Freddie Mac should be at the top of the list of any real effort at reform. Failure to address them in any meaningful way is simply irresponsible and continues to leave taxpayers vulnerable to future bailouts.
“I find it ironic that legislation aimed at clamping down on large Wall Street firms, has been supported by some of those very firms, like Goldman Sachs and Citigroup, but opposed by many community banks and small businesses. Like other so-called ‘reforms’ we’ve seen over the past year, this bill simply grows government without really addressing the causes of the crisis.”