No surprises here: Both of Washington state’s Senators voted to support the Wall Street reform bill that passed the Senate 60-39 today.
Sen. Maria Cantwell, a finance wonk who was deeply involved in the shaping of the bill, had opposed an earlier incarnation because of perceived loopholes in the regulation of derivatives. Earlier this month, she announced that a new version of the bill made significant enough changes to win her support.
“The fact that Congress made a mistake and said ‘hands off’ to derivatives in 2000, and then an $80 trillion market exploded into what is today a $600 trillion dollar dark market,” Cantwell said in a floor speech. “The (Senate Banking Committee) Chairman (Rep. Chris Dodd) has now made sure that for the first time, over-the- counter derivatives will be regulated.”
Sen. Patty Murray also voted in favor of the bill:
“This bill is going to make sure that Washington state families and small business owners are protected from predatory Wall Street tactics,” she said in a press release. “And it will guarantee that American taxpayers will never again be on the hook to bail out the big banks.”
Read on for their full statements.
Historic Financial Reform Package Includes Cantwell-Backed Measures to Control Derivatives for First Time Ever
Cantwell votes ‘aye’ in key cloture vote, final passage; bill requires transparency, control over dark markets that brought down our economy
WASHINGTON, DC – Today, U.S. Senator Maria Cantwell (D-WA) hailed Senate passage of historic financial regulatory reform legislation because – for the first time – it requires oversight and transparency in the dark over-the-counter derivatives markets that did so much damage to the U.S. economy. Cantwell cast a key vote in a 60-38 roll-call that ended debate, then voted for final passage, which cleared by a vote of 60-39. The House approved the bill June 30th, so today’s vote sends the measure to President Obama for his signature. Just before the final vote, Cantwell spoke on the Senate floor, saying that for the first time ever, the previously dark, unregulated swap markets would now be regulated and brought into the light of day. Her full remarks follow:
“I thank the Chair (Senate Banking Committee Chairman Christopher Dodd, D-CT) for yielding time and I want to thank him for his diligence, particularly in the area of the derivatives market and the fact that this legislation will be the first time, the first time, the over-the-counter derivatives market in this country will be regulated. The fact that Congress made a mistake and said ‘hands off’ to derivatives in 2000, and then an $80 trillion market exploded into what is today a $600 trillion dollar dark market. The Chairman has now made sure that for the first time, over-the- counter derivatives will be regulated.
“That means for the first time over-the-counter derivatives will have to be exchange traded, which means there will be transparency.
“It’s the first time over-the-counter derivatives will have to be cleared, which means a third party will have to validate whether there is real money behind these transactions.
“And it is the first time the CFTC will be allowed to say that they will be able to enforce aggregate position limits across all exchanges, which means you can’t hide this dark market derivative money on some exchange that isn’t properly regulated or try to make the market across all exchanges. And it is the first time that things like the London Loophole will be closed so that you can’t have markets and exchanges that aren’t regulated.
“So, to the American people, to know that something as dangerous as credit default swaps brought down our economy, that now, for the first time, we will have regulation of these over-the-counter derivatives, I thank the Chairman for his efforts in that area. A $600 trillion market, which is greater than 10 times the size of world GDP, is a danger to our economy if it is not regulated.
“Thank God we’re going to be regulating it for the first time. And I would encourage all my colleagues on the other side of the aisle who, at one point in time, said that these are too complicated to understand, understand that they brought down our economy, and understand that we are going to, for the first time, regulate over the counter derivatives.
“I thank the Chair for his leadership.”
Watch a video of Cantwell’s remarks.
Cantwell announced her support for the final version of the financial regulatory reform bill on July 1 because of tough new regulations of derivatives added in final House-Senate negotiations. Cantwell had opposed passage of the Senate version of the bill, citing loopholes in the derivatives title. Throughout the debate, she tirelessly fought to require transparency in the $600 trillion derivatives market. Cantwell authored an amendment, included in House-Senate conference, to impose tough penalties for evading the clearing and exchange trading requirements for derivatives. Upon completion of the conference version of the bill, Cantwell received written assurance from Gary Gensler, chairman of the Commodity Futures Trading Commission, that the bill “explicitly requires that swap dealers, major swap participants and financial entities use a clearinghouse for standardized or ‘clearable’ derivatives transactions.” The bill includes a narrowly-crafted exemption that will allow only legitimate commercial end-users – farmers, airlines, and manufacturers – to continue to hedge business risks without being subject to the clearing and exchange trading requirements. Gensler agreed with Cantwell’s interpretation of the bill: that it imposes strong oversight over the vast majority of derivatives trading. Cantwell said she is disappointed the bill does not reinstate the Glass Steagall separation of commercial and investment banking but believes the bill’s unprecedented regulation of the derivatives market squarely addresses the underlying cause of the financial crisis. The full text of Gensler’s letter is available here.
For more information on Cantwell’s amendments to the bill, see a July 1 press release.
Murray’s press release:
WALL STREET REFORM: Murray Votes to End Wall Street Bailouts, Protect Washington State Consumers and Small Businesses
Washington State Community Bankers Applaud Bill, Commend Senator Murray for Work on Legislation
(Washington, D.C.) – Today, U.S. Senator Patty Murray (D-WA) voted for the Wall Street Reform legislation that will protect Washington state families, hold Wall Street accountable, and guarantee that Washington state taxpayers will never again be on the hook to bail out Wall Street or clean up after big banks’ messes. The legislation passed today by a vote of 60-39 and is expected to be signed into law by President Obama shortly.
“With this vote today, the era of taxpayer-funded Wall Street bailouts is officially over,” said Senator Patty Murray. “This bill is going to make sure that Washington state families and small business owners are protected from predatory Wall Street tactics. And it will guarantee that American taxpayers will never again be on the hook to bail out the big banks. I was proud to stand up for my state’s families today and against the Wall Street lobbyists and special interests who were fighting so hard to protect big banks and maintain the status quo.”
“Wall Street reform legislation makes a big distinction between Wall Street Mega Banks and Main Street Community Banks. Within the legislation there are positives for Main Street Community banks including asset-based deposit insurance assessments, regulating non-bank financial competitors, deposit insurance limits increased and extending the deposit insurance coverage on noninterest-bearing transaction accounts and ending too big to fail. These enhancements and others will aid community banks in Washington State to continue to support the communities they serve through small business loans and financial services,” said John Collins President of the Community Bankers of Washington state, Washington’s leading association of Community Banks. “By ending ‘too big to fail’ and ensuring that large banks pay for the risks they create to the system this bill takes monumental steps to protect community banks our customers and taxpayers. The Community Bankers of Washington want to particularly commend Senator Murray for the leadership she provided in fighting for provisions that help support community banks and for ensuring that Wall Street’s megabanks pay their fair share for the risks they pose.”
See a full summary of the Wall Street Reform legislation that passed the Senate today
Murray spoke on the Senate floor yesterday to explain her support and highlight exactly how this bill will help Washington state families and small business owners. Murray told the stories of three Washington state residents who suffered due to Wall Street greed and irresponsibility—and spoke about what this bill will do to help them and people like them across the state. Murray also highlighted the contrast between those who are standing up for Washington state families and supporting Wall Street Reform, and those who are standing up for Wall Street, big banks, and special interests and trying to water down or kill reform.
The full text of Senator Murray’s 7/14 speech follows:
“M. President, I have been fighting hard for a Wall Street reform bill that protects my state’s families, holds Wall Street accountable, and includes a guarantee that American taxpayers will never again have to pay to bail out Wall Street or clean up after big banks’ messes.
“And I am proud to say that finally, after months of hard work, we are so close to passing legislation that does exactly this.
“M. President—this should not be a partisan issue. It shouldn’t be about right versus left or Democrats versus Republicans.
“It should be about doing what’s right for families and small business owners in my home state of Washington and across the country.
“It should be about who it is we choose to stand up for—who we think needs our support right now.
“Some people have spent the last few months standing up for Wall Street and big banks: Trying to water down this reform, and fighting every day against any changes that would prevent the big banks from going back to their ‘bonus-as-usual’ mentality.
“But I have been proud to stand with so many others to fight against the Wall Street lobbyists and special interest groups, and for the families I represent in Washington state.
“Families who want us to pass strong reforms that can’t be ignored or sidestepped.
“Who want us to end bailouts and make sure Wall Street is held accountable for cleaning up their own messes.
“And who want us to put in place strong consumer protections to make sure big banks can never again take advantage of our families, students, or seniors.
“Because Mr. President, for most American families this debate isn’t complex—it’s simple.
“It’s not about derivatives or credit default swaps.
“It’s about fundamental fairness. And it’s about making sure we have good, common-sense rules that work for our families and small business owners.
“It’s about the person who walks into a bank to sign up for a mortgage, or applies for a credit card, or starts planning their retirement—
are the rules on their side, or are they with the big banks on Wall Street?
“Because, M. President—for far too long the financial rules of the road have not favored the American people.
“Instead, they’ve favored: Big banks, credit card companies, and Wall Street. And for far too long they’ve abused those rules.
“So M. President, as we approach this vote, I think it is important for all of us to be clear about who it is we are fighting for.
“I am fighting for people like Devin Glaser, a school aide in Seattle who told me he had worked, saved money, and bought a condo before the recession began.
“He told me he put 20% down on a traditional mortgage and was making his payments.
“However, like so many others who have found themselves underemployed as a result of this recession, Devin has been unable to find more than 25 hours of work a week.
“He is now unable to pay his mortgage and is waiting to be foreclosed on any day now.
“I am fighting for people like Rob Hays, a Washington state student whose parents have put retirement on hold and gone back to work in order to send him to school.
“Just a few short years ago Rob’s parents were in the process of selling their home and preparing to retire. But then the foreclosure crisis took hold and they could no longer find a buyer.
“As a result they were forced to pay two mortgages with the money they had saved for Rob’s school—and retirement has been put on hold.
“And I am fighting for people like Jude LaRene a small business owner in Washington state who told me that when the financial crisis hit his line of credit was pulled.
“This forced him to lay off employees, go deep into debt on personal credit cards, and cut back on inventory.
“Despite the fact that his toy stores were more popular than ever!
“President, I am fighting for people like Devin, Rob, and Jude because they are the ones being forced to pay the price for Wall Street’s greed and irresponsibility.
“Whether it was gambling with borrowed money from our pension funds, making bets they could never cover, or peddling mortgages to people they knew could never pay— Wall Street made reckless choices that have devastated so many working families.
“In my home state of Washington, Wall Street’s mistakes cost us over 150,000 jobs.
“They cost the average family thousands of dollars in lost income.
“They cost small businesses the access to credit they need to expand and hire—and in many cases, caused them to close.
“They cost workers the retirement accounts they were counting on to carry them through their golden years. And students the college saving that would help launch their careers.
They cost homeowners the value of their most important financial asset as neighborhoods have been decimated by foreclosures.
“They cost our schoolteachers, our police officers, and our communities. And they cost workers like Devin, students like Rob, and small business owners like Jude.
“Mr. President, we owe it to people like them across the country to reform this system that puts Wall Street before Main Street.
“We owe it to them to put families back in control of their finances.
“We owe it to them to make sure the rules protect families sitting around the dinner table balancing their checkbooks and finding ways to save for the future—not those sitting around the boardroom table finding ways to increase profits at the expense of hard working Americans.
“And to do that, we need to pass this strong Wall Street reform legislation.
“M. President, it is important for families to understand what this bill does—and what exactly opponents of this legislation are fighting against.
“This bill contains explicit language guaranteeing that taxpayers will never again be responsible for bailing out Wall Street.
“It creates a brand new Consumer Financial Protection Bureau that will protect consumers from big-bank rip-offs, end unfair fees, curb out-of-control credit card and mortgage rates, and be a new ‘cop on the beat’ to safeguard consumers and protect families.
“It puts in place new protections for small businesses from unfair transaction fees imposed by credit card companies.
“It enforces limitations on excessive compensation for Wall Street executives.
“And it offers new tools to promote financial literacy and make sure families have the knowledge to protect themselves and take personal responsibility for their finances.
“I’ve heard so many stories from people across Washington state who have scrimped and saved, who made the best with what they had, but were still devastated through no fault of their own.
“People who played by the rules but who are now paying the price for those on Wall Street who didn’t.
“These are the people we need to stand up for—the people whose Main Street values I fight for every day.
“So M. President, with all of the new protections and reforms that this bill contains for families and small businesses—I have to ask—Who are the opponents of this bill fighting for? Who are they standing up to protect?
“You know, I grew up working at my Dad’s five and dime store on Main Street in Bothell, Washington. And like so many people across our country, Main Street is where I got my values.
“I was taught that the product of your work wasn’t just about the dollars in the till at the end of the day.
“I learned that a good transaction was one that was good for your business AND the customer.
“That strong customer service and lasting relationships often made your business stronger.
“That personal responsibility meant owning up to your mistakes and making them right.
“And that one business relied on the others on the same street.
“I was taught that customers were not prey and businesses were not predators. And that an honest business was a successful one.
“M. President, it’s time for us to bring those Main Street values back to our financial system.
“To bring back an approach that puts Main Street and families over Wall Street and profits.
“That protects consumers, holds big banks accountable for their actions, and makes sure people like Devin, Rob, and Jude are never again forced to bear the burden for the big banks’ mistakes.
“So I urge my colleagues to stand with me against the status quo, and for this strong Wall Street Reform bill that families and small businesses in Washington state and across the country desperately need.
“Thank you—I yield the floor.”