November 16, 2010
While the United States continues to come out of these difficult financial times, it is important we have sound financial laws in place that prevent us from repeating history. Thats why I was so pleased to learn about Congress passing the Wall Street Reform and Consumer Protection Act (HR4173).
This act will provide more transparency and accountability in the over the counter derivative market, protecting consumers in the future. It will accomplish this by establishing clearinghouses that review and process the exchanges. Because big banks have proven that they cannot be trusted the independence of these clearinghouses is essential.
Before you now are two versions of regulations that would affect the ownership of these clearinghouses. One rule, the 20/40 Rule, limits individual entities to 20% ownership and restricts big banks from owning more than 40% of the clearinghouse. The second rule, the 5% Rule, limits an entity to owning as much as 5%, but does not restrict the total percentage of clearinghouses owned by big banks.
By not restricting the total ownership percentage, the 5% regulation would fail to restrict big banks from pooling their resources together and gaining majority control of the clearinghouse.
Given the recent behavior by big banks, there is no reason they can be they can be trusted. To protect homeowners and consumers from abuse, I ask you strike down the 5% Rule and support the 20/40 Rule.