The Legislative Agenda to Put Main Street First
By Dennis Kelleher, President and CEO of Better Markets
Having won control of the House, Democrats need to push a robust policy agenda that concretely connects with Main Street Americans who care about their jobs, wages, benefits, savings, investments, homes, retirements and so much more. Their quality of life and standard of living must be the guideposts.
The powerful House Financial Services Committee should be at the forefront of those efforts. That committee has jurisdiction over all aspects of finance, from Wall Street’s biggest financial conglomerates and global hedge funds to the smallest community banks and storefront payday lenders.
What the committee does impacts every American with a credit card, a checking or saving account, a personal loan, a mortgage, a student loan or any other financial product or service. Thus, the committee’s agenda will affect everyone’s wallet or pocketbook.
A Main Street jobs agenda would support those financial institutions and activities that support the productive economy, jobs, growth, home ownership and, ultimately, the American Dream of broad-based prosperity.
The activities of those community banks, credit unions, regional lenders and others will also highlight the socially useless, self-enriching gambling of other financial institutions, particularly the biggest ones on Wall Street.
The committee must dramatically refocus its agenda from Wall Street’s wishlist to Main Street’s needs. For too long, Wall Street has been Congress’s primary constituency.
Democrats must restore the balance from a one-sided, pro-Wall Street, pro-big bank agenda to one that focuses on the needs and aspirations of Main Street for economic opportunity and security.
That agenda must:
- promote a financial system that supports the productive economy, jobs and growth, which will reduce inequality and enable broad-based prosperity and rising living standards;
- end socially useless, bonus-driven financial activities that create and perpetuate the boom/bust cycle;
- protect hardworking Main Street families, consumers and investors from financial predators; and
- eliminate bailouts by ending Wall Street’s too-big-to-fail, too-big-to-jail, too-big-to-manage and too-big-to-regulate financial institutions.
We can’t forget that the biggest threat to durable and sustained economic growth is deregulation of finance, which caused the historic job-killing crash of 2008 and will cause the next one if not stopped.
For example, the evidence proves that banks with more capital are not only safer, but also lend through the business cycle rather than pulling back and making the downturn worse.
Protecting consumers and investors must be another key part of the agenda. Scrutinizing Acting Director Mick Mulvaney’s attempts to transform the Consumer Financial Protection Bureau (CFPB) into the “Financial Predator Protection Bureau” has to be a priority.
Americans deserve to know why the CFPB seems more interested in protecting payday loan predators than payday loan victims and why it would side with rapacious for-profit colleges that prey on students seeking a decent education and a better job.
Americans also deserve to know how the Securities and Exchange Commission (SEC) can claim to protect investors while proposing a misleadingly labeled “regulation best interest” rule that does not require advisors to put investors’ best interests first.
Similarly, that agency cannot be allowed, as has been suggested, to take away investors’ rights to a fair and affordable hearing in open court while forcing them instead into secret industry-biased arbitration proceedings.
The crime spree on Wall Street and finance more broadly must end along with the total lack of accountability at the executive and supervisory levels. Long-overdue committee oversight and investigations must bring transparency, oversight and accountability to financial regulators and Wall Street’s financial conglomerates.
Regulators must not be allowed to continue to favor the anti-competitive activities of the biggest institutions while ignoring the less politically-powerful, but more important firms that truly facilitate the capital formation process for Main Street businesses.
Investigating the particularly irresponsible and dangerous activities by foreign banks in the U.S. must be included as well. For example, Deutsche Bank’s U.S. operations are notorious for having inadequate capital and engaging in irresponsible behavior.
While the Fed in 2008 provided a U.S. bailout to Deutsche Bank rather than letting the Germans bail out their own bank, it’s long past time that the sunlight be shed on the activities of Deutsche Bank.
Finally, the committee has to look at rapidly developing fintech and financial innovation more broadly. These activities are inevitable and will be disruptive, but will they benefit Main Street families, investors and consumers while supporting economic growth and jobs?
Or, will they just be new ways to separate unsuspecting Americans from their money? The committee needs to get answers to those questions.
None of this is “bank bashing,” as Wall Street, its lobbyists and allies like to call any deviation from their talking points. This agenda would support the many financial and banking institutions and activities that enable the productive economy to work for Main Street.
After all, that is the only reason the financial system is backed by taxpayers in the first place. But, the agenda would also scrutinize and stop destabilizing, predatory, bonus-driven and anti-social financial activities wherever they occur.
This isn’t about political point-scoring, grandstanding or YouTube moments. It is about building a strong, substantive foundation for a meaningful and relatable economic agenda that directly resonates with the real concerns of Americans working hard to achieve the American Dream.
The worst financial crisis since the Great Depression was just 10 years ago. The American people are sick and tired of working harder for less while gigantic financial conglomerates get bailed out and get favorable treatment from regulators, policymakers and elected officials.
Rather than help Wall Street break records for revenues, profits and bonuses, the new House Financial Services Committee’s agenda should enable Main Street to break records for income, wages, savings, investments, home prices and so much more.
Disclaimer: this op-ed originally ran in the hill
Dennis M. Kelleher is president and CEO of Better Markets, a Washington-based organization that promotes the public interest in financial reform, financial markets and the economy.
