Op-Ed

Earlier this year, President Obama announced his plan to reform our country’s financial system. After several months of debate, the House Financial Services Committee, of which I am a senior member, produced a more than 1,300-page bill that includes nine separate pieces of legislation — including two that had already passed the House. Last week, the House passed the bill by a slim margin.

In addition to dramatically expanding the power of the Federal Reserve and establishing a "credit czar” who will have virtually unlimited authority to restrict consumer choices and impose fees on financial institutions, H.R. 4173, the Wall Street Reform and Consumer Protection Act, would create a permanent bailout fund for "too big to fail” companies that make poor decisions. In order to pay for this, the bill will impose a $150 billion tax on financial institutions — a tax that will most certainly be passed down to consumers in the form of higher fees and restricted credit. If additional funds are needed, the American taxpayer will be on the hook once again.

Establishing a permanent bailout will only encourage the systemically risky behavior that originally led to the financial crisis. If financial institutions know they will not be held accountable for their poor mistakes, there is nothing to stop them from making more. The American people want accountability and responsibility on Wall Street — not more taxpayer-funded bailouts.

The federal government should never have gotten into the job of bailing out Wall Street and making bailouts a permanent way to handle "too big to fail” companies only compounds an already bad policy. This country already has a time-tested procedure for dealing with failing companies: bankruptcy. Bankruptcy would allow failing financial institutions to restructure and streamline their operations in an orderly fashion without rewarding risky behavior or using taxpayer money.

Regulatory reform of our financial system is needed. However, rather than using this opportunity to enact meaningful reform that creates financial stability and encourages economic growth, President Obama and Chairman Barney Frank have constructed a massive piece of legislation that restricts credit availability and does little to address the real problems in the financial industry. As a senior member of the House Financial Services Committee, I will continue to work with my colleagues to produce real regulatory reform.

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