Congressman Gregory W. Meeks Opening Statement at Financial Reform Conference Committee

(WASHINGTON, DC)– Chairman Frank, Chairman Dodd, colleagues, it is a privilege to participate in this conference committee and to contribute to reconciling the financial reforms bills passed in the House and Senate. The magnitude of the moment, and the importance of the work before us, should not be underestimated. Not since the Great Depression have members of Congress strived to implement such strong and necessary financial reforms.

As we do this, it matters to remember why we are here. A failed and antiquated regulatory framework resulting from a blind commitment to deregulation led to uncontrolled systemic risks and a situation where a handful of financial firms nearly brought the entire American economy to its knees. Systemic risks result from size, leverage and interconnectedness. As we complete the work of reforming the regulatory framework for the financial sector, we must stay focused on regulating systemic risks. Our work here will only be successful if it effectively monitors and mitigates systemic risks, while maintaining a light touch on non-systemic firms and activities, so as to not stifle innovation and the world-leading competitiveness of the American financial industry. There are several key areas that I plan to be especially focused on in the coming weeks.

On derivatives, I am very concerned that a singular focus on speculative use of derivatives will penalize the millions of American businesses that use derivatives responsibly for risk management. Specifically, language obligating financial institutions to push out their derivatives operations is likely to create new, unknown systemic risks, and to put significant pressure on the balance sheets of financial institutions and end-users, who use derivatives to manage business risks.

I am deeply concerned by the unintended consequences on consumers, the poor, and military veterans who will be devastated by the hasty inclusion of language aimed at Interchange fees. As James Baldwin once wrote, “Anyone who has ever suffered under poverty knows how expensive it is to be poor.”

Language from the Interchange amendment will cripple credit unions and community banks, the last bastion of credit and lending for America’s struggling homeowners, while harming consumers, who will be forced to carry multiple cards or abandon the use of cards outright.

State treasurers from across the country have weighed in against this language, noting the devastating impact on their budgets and their ability to deliver financial assistance to working families. The poor, already struggling in the midst of the worst economic crisis since the Great Depression, cannot withstand this double-barreled assault on their benefits and dignity. This is not the result Congress should legislate.

If America is suffering a Great Recession, then minority communities, and the black community in particular are enduring a Great Depression. Minorities have suffered disproportionately in this financial crisis. Many already marginalized communities were prime targets for predatory behavior by financial institutions. They stretched what little resources they had farther to achieve the American dream. Now, they face catastrophic unemployment rates, and the loss of wealth that took generations to build. The House bill included important language for the establishment of minority interest offices in each primary financial regulator, provided assets for neighborhood stabilization for the hardest hit communities, and called on the administration to follow-through on existing commitments to minority businesses. I plan to fight hard for the inclusion of this language, as it’s omission from the final bill would be a grave mistake.

On the Volker rule, I want to ensure that it achieves what it was intended to. Specifically, the Volker rule seeks to eliminate speculative trading that pose a systemic risk. Effective implementation of this rule must not overreach by preventing valuable activities that financial institutions provide, including trade execution on behalf of clients, seeding investment funds and private equity funds that provide needed capital to companies nationwide, promoting job creation and innovation.

I am concerned about language that potentially limits the IMF’s capacity to fulfill its mission of providing global monetary stability. The IMF never steps in without implementing appropriate safeguards to ensure full repayment of funds provided by the Fund’s shareholders, including the United States. The IMF’s structure and mission benefit the United States by protecting the resources of the shareholders, and facilitating monetary stability so that a crisis in one country does not trigger international contagion.

Finally, I plan to work with my colleagues on language relating to the exploitation of valuable minerals from conflict zones. American industry must act responsibly and contribute to economic development wherever it operates, and not be complicit in perpetuating conflict and suffering.

In closing, it is appropriate to look back at lessons learned from the regulations implemented following the Great Depression. During the 1930’s, legislators implemented commonsense regulations designed to curb systemic risk. It is time for us to update the regulatory framework to set the stage for decades of financial stability, economic growth, and job creation without cyclical bank failures and deep financial crisis such as the one we are now beginning to emerge from.