At the second in a series of hearings on the fifth anniversary of the Dodd-Frank Act, Congresswoman Maxine Waters (D-CA), Ranking Member of the Financial Services Committee, noted that while Dodd-Frank has done much to stabilize our financial system, the devastating effects of the crisis continue to affect some of the most vulnerable segments of our population.
She also underscored the importance of focusing on public housing, the cities and towns still devastated from the foreclosure crisis, and the community banks and credit unions that need relief.
In her remarks, the Ranking Member also criticized the Gramm-Leach-Bliley Act, which engendered the rise of mega banks and led to the worst financial crisis in a generation.
Full text of Waters’ remarks is below.
“Thank you, Mr. Chairman and welcome witnesses.
I’d like to acknowledge two distinguished former members of Congress who are with us today. First, Congressman Brad Miller, our longtime colleague on the Financial Services Committee, and former Banking Committee Chairman Senator Phil Gramm.
Today’s hearing is focused on whether or not we are more prosperous five years after Dodd Frank – which was enacted after our nation suffered the greatest destruction of wealth in 80 years.
Just as the Sarbanes-Oxley Act was enacted in reaction to several corporate and accounting scandals – most notably Enron – so too was Dodd-Frank enacted as a reaction to years of deregulation, lax enforcement and zero accountability for the nation’s financial institutions. Even the legendary champion of the free-market, Alan Greenspan, has now acknowledged that he made a mistake and that the market did not – and cannot – police itself.
The crisis left an indelible mark on our financial system, our housing market and our way of life. We all know the numbers: 9 million Americans lost their jobs, 5 million homeowners lost their homes to foreclosure, and $16 trillion in household wealth was destroyed.
We have come a long way since those dark days. A new staff report released by Committee Democrats shows unequivocally that Dodd Frank has made our financial system more transparent, more stable and more accountable. The CFPB has returned 10.8 billion to 17 million defrauded consumers; over-the-counter derivatives, once traded in the shadows, are now more transparent; and regulators are getting tougher on banks to ensure that their failure doesn’t endanger the wider economy.
The stability created by Dodd-Frank has allowed our nation to once again prosper. The housing market is improving, the economy has added nearly 13 million private sector jobs over 64 consecutive months of job growth, and the unemployment rate has plunged down to 5.3 percent. Moreover, the average 401(k) balance reached a record high last year, and the S&P 500 has risen by more than 250 percent since February 2009.
So we are more prosperous. But there is much more work to be done.
The crisis exacerbated what was already an unacceptably large wealth gap between white and minority households. The current wealth gap between African-Americans and whites has reached its highest point since 1989. The current white-to-Hispanic wealth ratio has reached a level not seen since 2001.
We need to make sure that it’s not just Wall Street bankers who are becoming more prosperous – but also the millions of Americans who are worried about a roof over their head, worried about getting a job that pays a living wage, and worried about being able to afford the high cost of college.
And let me be clear: recent history demonstrates that deregulation of our largest financial institutions, coupled with systematic disinvestment from low-income, middle-class and minority neighborhoods, is no way to ensure that prosperity is widely shared.
In fact, later today, we will mark-up fourteen proposals which, in many cases, loosen the rules for large banks whose prosperity doesn’t need any more assistance from this Committee. Instead, we should be focusing on the residents of public housing, the cities and towns still devastated from the foreclosure crisis, and the community banks and credit unions that need relief.
Finally, Senator Gramm, you are the namesake of the so-called Gramm Leach Bliley Act, which you don’t mention in your testimony, but which turned our nation’s biggest banks into megabanks and dramatically intensified the effects of the crisis.
Opposing that measure is among the proudest votes I have taken as a member of Congress. And in the aftermath of the crisis, some of the law’s most fervent supporters have very publically reconsidered their support. So I’m interested in hearing you discuss – after watching the harm and heartache of the 2008 crisis – if your views have at all changed.