NM Congressional Delegation Weighs in on Obama's Signing of Wall Street Reform and Consumer Protection Act

A quick and simple animated explanation of how Wall Street Reform will work and what the strongest consumer protections in history will mean for you and your family.

Another victory for the American people, brought to us by President Barack Obama and a U.S. House and U.S. Senate led by Democrats. Today, President Obama signed into law H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act. The legislation reins in Wall Street, ends taxpayer bailouts of big banks and creates a consumer financial protection bureau. The video above walks through what the bill means for the American people. Visit the White House website for video and text of President Obama's remarks at today's bill signing.

New Mexico's members of Congress responded this way:

Rep. Martin Heinrich (NM-01):

“The signing of this bill marks the end of an era of turning a blind eye to unbridled greed and lack of oversight that led to our nation’s financial crisis.

“Too many New Mexican consumers have been impacted by foreclosure scams, predatory lenders, excessive interest rates, and unreasonable fee hikes. The Wall Street Reform and Consumer Protection Act puts American consumers first and holds Wall Street and big banks accountable.

“We know we can’t trust big banks when they tell us they will self-regulate. It is the responsibility of Congress to protect people on Main Street from criminals like Bernie Madoff and reckless companies like AIG. Wall Street reform demands accountability and responsibility in the financial industry and puts an end to taxpayer funded bailouts once and for all.

“While Republicans press on with failed policies from the Bush agenda playbook that protected big banks at the expense of America’s families, Democrats continue to build a solid economic foundation for generations to come that rewards hard work and responsibility.”

Rep. Harry Teague (NM-02):

“For too long, Wall Street banks have been getting away with the abusive, predatory and risky practices that contributed to one of our nation’s worst economic crises and resulted in the big corporate banks turning to the American taxpayer for a bailout. Today marks an important step in ending that era of Wall Street bailouts and ensuring that honest, hardworking New Mexicans aren’t stuck with another bill resulting from reckless actions on Wall Street. Without penalizing small community banks and credit unions, this common sense legislation ensures that failing financial institutions don’t get deemed “too big to fail” and end up derailing our entire financial system.”

Rep. Ben Ray Lujan (NM-03):

“For too long Wall Street banks have profited while their irresponsible behavior have hurt New Mexican families. The Wall Street Reform bill signed into law today will hold Wall Street accountable for irresponsible behavior, help put an end to bailouts, improve oversight and transparency in the financial system and protect consumers from predatory financial practices. This is an important step toward making sure the problems that led to our current economic crisis do not happen again.”

Senator Jeff Bingaman:

Senator Jeff Bingaman said the law will bring new accountability to Wall Street and work to avoid an economic meltdown like the one from which we’re trying to recover. Bingaman voted last week to send the Wall Street Reform and Consumer Protection Act to the White House.

“Wall Street recklessness is largely responsible for the loss of millions of American jobs over the past two years. This bill enacts reforms that will protect Americans and prevent Wall Street from wreaking such havoc on our economy in the future."

Senator Tom Udall:

“Today, the United States Senate took action to prevent the same financial regulatory failures that led our nation to the brink of economic collapse from occurring again. We passed a bill that will end taxpayer bailouts of firms that are ‘too-big-to-fail’ and instead sets up a process of safe liquidation. Additionally, we have put strong measures in place to discourage banks from ever getting too big again.

“A particular highlight of this legislation is the creation of a Consumer Financial Products Bureau, which will have the sole job of protecting Americans from unfair and deceptive financial products and practices. This bureau will ensure that our citizens are able to receive clear, honest information they need about loans and other financial products like credit cards and credit reporting. Most importantly, it will establish a national hotline where consumers can report their concerns.

“Overall, this legislation takes significant steps to make sure the jobs, homes and life-savings of Main Street can no longer be held hostage by the culture of greed on Wall Street. It’s a monumental step towards correcting the reckless behavior of the past, and I look forward to seeing it signed into law by President Obama.”

What Does the Law Do?
The Wall Street Reform and Consumer Protection Act will help prevent the risky financial practices that led to the financial meltdown and stop large financial firms from gambling with Americans’ retirement and college savings and home values. In addition, taxpayers will no longer pay the price for Wall Street’s irresponsibility. The bill creates a process to shut down large, failing financial institutions whose collapse would put the entire economy at risk. After exhausting a company’s assets, additional costs would be covered by a “dissolution fund” paid for by financial firms instead of American taxpayers.

The bill will also create the Consumer Financial Protection Bureau (CFPB), a new consumer watchdog devoted to protecting Americans from unfair and abusive financial practices. This independent bureau will provide clear and accurate information to families and small businesses to ensure that bank loans, mortgages, and credit cards are fair and affordable. Just like the FDA does for medical safety, the CFPB will set safety standards to prevent practices such as hidden credit card fees, deceptive “fine print,” and other financial abuses that have escaped oversight for far too long.

Instead of seven agencies dealing with consumer issues part-time, one agency will be in charge of establishing clear rules of the road for banks, mortgage companies, payday lenders and credit card lenders.

Mortgage brokers won't make a higher commission by selling people mortgages that they can't afford. This was a major factor in the recent housing crisis. Now brokers and banks have to take into consideration a borrower's ability to repay before giving a home loan.

You’ll be able to get a free credit score if you’re denied a loan, an apartment, or a job because of your credit, so you won’t be turned down without knowing why. Right now, you get one free credit report a year, but you can’t see your credit score for free, even if a lender or employer rejects your application because you have bad credit.

Advance Warning System: The bill would create a council to identify and address systemic risks posed by large, complex companies, products, and activities before they threaten the stability of the economy.

Transparency & Accountability for Exotic Instruments: The bill would eliminate loopholes that allow risky and abusive practices to go on unnoticed and unregulated -- including loopholes for over-the-counter derivatives, asset-backed securities, hedge funds, mortgage brokers and payday lenders.

Executive Compensation and Corporate Governance: The bill would provide shareholders with a say on pay and corporate affairs with a non-binding vote on executive compensation and golden parachutes.

Protecting Investors: The bill would provide tough new rules for transparency and accountability for credit rating agencies to protect investors and businesses.

Enforcing Regulations on the Books: The bill would strengthen oversight and empower regulators to aggressively pursue financial fraud, conflicts of interest and manipulation of the system that benefits special interests at the expense of American families and businesses.

Lujan Amendment: The legislation also accomplishes the goals of the Luján Amendment to the House bill by preventing banks from merging with nonbank entities to become a too-big-to-fail company. Under current law, a bank cannot merge with another bank if the combined deposits equal or exceed 10 percent of all US deposits. There is currently a loophole that allows a bank to buy a nonbank entity, such as a thrift, and exceed this threshold. For example, Bank of America’s purchase of Countrywide Mortgage in 2008 exploited this loophole to become the largest bank holding company in the country.

Rep. Luján’s amendment, which was originally added to the House legislation in the manager’s amendment, would close this loophole and prevent banks from merging with thrifts if the combined deposits equal or exceed 10 percent of all US deposits. This ensures that no bank can grow beyond 10 percent of all US deposits through a merger, preventing the creation of “too big to fail” entities that could threaten the stability of the financial system.