Congressman Barney Frank (D- MA), along with Congresswoman Maxine Waters (D-CA), Congressman Stephen Lynch (D-MA) and Congressman Joe Courtney (D-CT) released the following statement today calling for implementation of reforms in the Wall Street Reform and Consumer Protection Act:

“The possibility of default on Greek or other European debt dramatically illustrates the need for the United States to move forward rapidly to implement the reforms passed by Congress in the Wall Street Reform and Consumer Protection Act.  The difficulty in global financial markets is greatly exacerbated because we don’t know who is exposed to what risks and how large those risks are.  Consequently, renewed growth is at risk everywhere.  And recent stories in The New York Times, The Financial Times, and The Wall Street Journal report that those with significant sums at risk may include American financial institutions.

“The lack of transparency – particularly in derivatives markets – was a major cause of the recent crisis and remains a clear and present danger to the financial system.  The current situation regarding credit-default swaps on European debt is characterized by a similar lack of transparency.  As one market watcher told the New York Times, “There’s not any clarity here because people don’t know… The industry is still refusing to provide the disclosure needed to understand this… The Street doesn’t want you to see what they’ve written.

“Several major provisions of the financial reform law are specifically designed to eliminate such dangerous opacity in our markets and institutions, and to give investors and regulators the tools to find and address the buildup of undue risk before it becomes a threat to the system. The law brings the derivatives markets out of the shadows by requiring reporting of all swap transactions and by requiring exchange-trading and central clearing for most of them; gives authority to the Financial Stability Oversight Council and the Federal Reserve with the help of a new, specially-dedicated Office of Financial Research which will collect information from systemically significant financial institutions; requires these firms to submit detailed plans for their own orderly dissolution in the event of failure; and requires rigorous periodic stress tests for these firms.

“Sadly, even with another potential financial disruption demonstrating the clear need for more openness and accountability, Congressional Republicans continue their efforts to delay, defund, and defang these and other provisions that will make our markets safer and our regulators more effective.  Our financial system needs more transparency and serious oversight, not less, and needs it sooner, not later, to prevent risky behavior from burgeoning into full-blown financial crises.  The Wall Street Reform and Consumer Protect Act provides a path to that result, and we need to stay on it.”