On June 30, 2010, Rep. Eshoo voted for and the House of Representatives passed H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act. Rep. Eshoo describes this landmark legislation as “one of the most critical bills I have ever voted for in Congress.” The bill protects the American people so they are never again victimized by reckless Wall Street behavior which brought our economy to its knees, wreaking havoc across the country with over 8 million jobs lost and a $17 trillion loss in net worth. It makes the most sweeping and comprehensive reforms to our financial system since the Great Depression.
The Wall Street Reform and Consumer Protection Act:
- Ends taxpayer-funded bailouts because of Wall Street’s risky decisions and greed: The legislation clearly states that taxpayers will bear no cost for liquidating large, interconnected financial companies;
- Protects families and small businesses from abusive lending practices: The legislation creates the Consumer Financial Protection Bureau, which will ensure bank loans, mortgages, and credit card agreements are fair, affordable, understandable, and transparent;
- Stops banks from becoming “too big to fail”: The legislation creates the Financial Stability Oversight Council which is charged with identifying and responding to emerging risks throughout the financial system. The Council will make recommendations to the Federal Reserve for increasingly strict rules for capital, leverage, liquidity, risk management and other requirements as companies grow in size and complexity, with significant requirements on companies that pose risks to the financial system;
- Eliminates grave threats to financial stability in the U.S.: The Financial Stability Oversight Council can also break up large, complex companies by requiring them to divest some of their holdings — but only as a last resort;
- Requires hedge funds and private equity funds to register with the Securities and Exchange Commission, which will have more enforcement power and funding;
- Eliminates excessively risky practices that led to the financial collapse: The bill enhances oversight and transparency for credit rating agencies;
- Limits bank executive and CEO risky pay practices: The bill addresses egregious executive compensation that jeopardizes the safety and soundness of banks. It also allows a ‘say on pay’ for shareholders, requiring independent directors on compensation committees;
- Assists minority-owned and women-owned businesses: The bill establishes an Office of Minority and Women Inclusion at federal banking and securities regulatory agencies that will, among other things, address employment and contracting diversity matters. The office will coordinate technical assistance to and seek diversity in the workforce of the regulators;
- Prevents predatory mortgage lending: The bill requires lenders to ensure a borrower’s ability to repay, prohibits unfair lending practices, establishes penalties for irresponsible lending, expands consumer protections for high-cost mortgages, requires additional disclosures for consumers on mortgages, and provides housing counseling.
This legislation was signed into law by President Obama on July 21, 2010.