It’s often been said that those who forget history are doomed to repeat it. Following the great stock market crash of 1929, Congress and the states enacted a series of meaningful and effective reforms that served our country well. Our markets were stabilized, our economy grew, and families saved and bought homes they could afford. Unfair and predatory business practices were the exception.
For 50 years, Wall Street was required to play by the rules – rules designed to ensure financial strength, protect consumers and provide an even playing field.
But starting in the 1980s, financial interests convinced Washington to relax the laws and take actions that protected large financial firms at the expense of small business. Wall Street’s profiteering went on steroids and Americans paid the price – bearing the brunt of the worst economic crisis since the Great Depression.
Congress is now considering a Wall Street reform package that is designed to correct the mistakes we have made in the last 25 years. It is essential that Congress gets the job done and restores responsibility, accountability and oversight. And it’s essential that they do it right.
Our current system of Wall Street oversight is divided and fractured. All too often, the regulators have been influenced by the financial firms they are supposed to regulate. Big banks have found ways to skirt our laws and avoid regulation by developing business practices to fit the loopholes. As a result, the interests of consumers often take a back seat to the interest in profits. The proposed Consumer Financial Protection Bureau will focus on protecting consumers and coordinating regulation to assure that businesses operate fairly and competitively. This new bureau is a critical component of real reform.
It is also essential that, as we reform Wall Street, we protect the role that states like Montana can play. Our founding fathers knew what they were doing when they created a federal system of shared power. Unfortunately, in recent years, folks in Washington have enjoyed an unrestricted power grab, which has given national banks the ability to avoid state laws designed to protect Main Street. We can’t expect local interests to be recognized if local regulators don’t have a seat at the table.
States are often the first responders in dealing with problems their residents face – for example, it was the states that played the leading role in investigating and prosecuting one of the largest predatory lending schemes, against the mortgage lender Countrywide. And it was the states that delivered billions in compensation for the victims of those abuses.
Congress must guarantee that Wall Street reforms don’t undercut the ability of states to enforce our laws. There is simply no way that regulators in Washington, D.C. – 2,500 miles away from Montana – can effectively protect consumers throughout the entire nation. You can’t rely on a Wall Street mindset and expect that Main Street will be protected.
Both here in Montana and in Washington, we need financial cops on the beat with tools to protect consumers. History has shown that businesses can play by the rules and still prosper.
Our senators, Max Baucus and Jon Tester, are committed to strong protections for consumers and are dedicated to making sure that Montana’s Main Streets don’t suffer for Wall Street’s bad behavior. Montanans should support their senators for this commitment.
Steve Bullock was elected Montana’s 20th Attorney General in November 2008.