Will the new scrutiny House Financial Services Committee chairwoman Maxine Waters proposes prevent another financial crisis? Last week Ms. Waters pledged that this committee will keep an eye on the larger banks and pay closer attention to whether regulators were trying to weaken the safeguards and regulations enacted after the last financial crisis.
What some predict will be intense House hearings this spring might lead to the implementation of legislation that could break up the big bank’s stranglehold. The CEO’s of six of our top banks will be testifying this spring for the first time since shortly after the financial crisis and so far there has been little comment from their spokespeople.
He and other members of the committee are taking a hard line. New committee member Rep. Alexandria Ocasio Ortiz (D-NY) has called for the breakup of “oversized banks to reduce the likelihood of a financial crash.”
As I’ve often said, the large banks have had a stranglehold on our country for a long time. We have been systematically gutting regulations that gave somewhat of a checks and balance. We’ve been steadily chipping away at Dodd-Frank and the large banks have more influence, power and money than ever before, at the expense of consumers and community banks.
In 2015, while being interviewed on Bloomberg TV, I publicly called for an investigation by Congress into the cover-ups I had witnessed at the Financial Crisis Inquiry Commission (FCIC). I told anchor Stephanie Ruhle of Bloomsberg Business, “the lack of prosecutions as a result of the financial wrongdoing in the financial crisis… does not indicate a lack of evidence, but may indicate a lack of effort.”
I had submitted evidence to the SEC and FCIC and even sent a letter to Jeb Hensarling, the former chairman of the House Financial Services Committee, calling for a Congressional hearing into the misconduct of the large banks and the consistent cover ups that resulted. And when the National Archives started releasing FCIC documents in 2016 it was discovered the FCIC had made eleven criminal referrals based on the substantial evidence they had collected and sent those referrals to then Attorney General Eric Holder of the DOJ, who apparently ignored the referrals and evidence until the statute of limitations ran out.
With no large bank accountability in the last crisis combined with too much deregulation we could once again be accelerating toward another financial crisis as the recent International Monetary Fund working paper by David Dayen, published in January of 2018, states. Based on 300 years of statistical evidence, the paper provides empirical support for the idea that increasing large-scale bank deregulation actually helps precipitate a financial crisis.
Since it’s obvious we don’t learn from our mistakes perhaps what is needed is a tougher stance on oversight and accountability, the strengthening of consumer protection and the elimination of discrimination within the financial sector that the committee claims is rampant.
Ms. Waters said, “this would be a new day in Congress for the Financial Services Committee and a day of reckoning for bad actors.”
The Committee is focused on several key issues :
- Consumer Financial Protection and Mulvaney’s Legacy and an examination of the role of that department and how it has gone awry under Mulvaney and this administration.
- Financial Regulation Oversight; Ms. Waters has continually emphasized the importance of congressional oversight and the merit in holding bad actors accountable, two themes the Revolving Door Project has been highlighting.
- Housing; With the Committee working to eliminate the housing affordability and homelessness issues and
- Diversity and Inclusion so that African Americans and women are more fairly represented at various management levels.
There is no question that the House Financial Services Committee intends to rattle a few cages and be tough in examining issues that have us headed to another 2008 financial crisis.
The question we need to ask is, are they too late? Or is there a possibility that the last couple of years wild west attitude toward regulations can be reversed or at the least tempered?
Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.
