November 17, 2010
Congress took a bold step by passing HR4173 this year. However, I am concerned about the potential changes that could be made to this legislation which already passed. The functionality of Wall Street, and therefore our economy as a whole, relies on not repeating the same closed door derivatives trading between banks which encouraged the recession. The financial health of our nation is at stake when making regulation changes, such as who owns the clearinghouses, which are intended to make such trading more transparent.
I agree that over use of regulation is counter to our capitalistic economy, but when an industry and specific groups of companies have proven to be irresponsible, the use of independent clearing houses is just common sense. And, the legislation already passed by a majority of Congress limits ownership of clearinghouses. If clearinghouses are to referee trading between large banks, they cannot be owned by banks. Soon this commission will consider lightening the regulation by allowing banks to collectively hold a majority of a clearinghouse. This 5% rule would then be an option for banks using the clearinghouse to manipulate that entity.
America is about honest business, and the access to opportunity. Small changes such as the 5% rule would give a green light to banks to continue circumventing transparency. The future of our credit and housing affects too many American families to risk the mistakes of big banks, again. I urge you to tell banks they cannot buy up clearinghouses and leave the 20/40 rule in this reform law.