VIDEO: Rep. Foster Calls For Increased Protection In Financial Markets
Washington, DC—Today, Congressman Bill Foster (IL-11) spoke against H.R. 1062, the SEC Regulatory Accountability Act and called for increased support for SEC regulators tasked with preventing fraud and protecting our financial markets.
Foster warned of the high cost of deregulation and inadequately funded regulators, which led to the economic collapse that cost Americans $16 trillion – more than $50,000 for every man, woman and child in the United States.
As a member of the Financial Services Committee, Foster played a key role in crafting the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Video of Congressman Foster’s remarks can be found here.
A full transcript is below:
“Mr. Chairman, I rise in opposition to this bill. When my colleagues speak about the burdensome cost of regulations, I would like to remind them of the high costs of deregulation and inadequately funded regulators that we witnessed in 2008.
This bill would increase the operating costs for the SEC without any increase in the agency’s budget. Just yesterday, the Chairman of the SEC warned the Financial Services Committee that this bill would divert resources from enforcing investor protections.
And last year, former SEC Chairman Schapiro said that a nearly identical bill would quote, “significantly impede the SEC’s ability to administer the securities laws.”
I would remind my colleagues that what the failure to administer the securities laws and regulate our financial system has cost us. $16 trillion dollars – that’s the amount that families in America lost during the financial crisis. That is more than $50,000 for every man, woman and child in the United States.
During the financial crisis, in the last 18 months of the Bush administration, the average American family lost a quarter of its net worth. Compare that to the onset of the Great Depression, where families lost only about 12% of their net worth during a five year period.
So by that measure, our last financial crisis was twice as big, and twice as fast, as the onset of the Great Depression. But the cost of inadequate regulation does not stop there.
$1.6 billion – that’s about the amount that disappeared from customer accounts at MF Global in 2011. $17 billion dollars – that’s the amount that in 2009 Bernie Madoff was convicted of scamming investors out of. $1 trillion dollars – that’s the amount of wealth that disappeared and reappeared in less than 20 minutes during the flash crash in 2010.
To put these figures in perspective, let’s consider and compare them to bank robberies. Every year, banks lose about $38 million to robberies. Yet we spend $24 billion every year on armed guards, vault doors, and FBI investigations – So for bank robberies, we spend 600 times more on prevention than actual losses.
Just imagine if we applied that same factor of 600 to investor losses from securities fraud and market manipulation. The budgets of our regulators would be hundreds of times larger than they are today.
You know the cynic in me can only conclude that what’s really going on here is that the bank robbers just have really crummy lobbyists.
But seriously, if we can spend 600 times the amount of actual losses to prevent bank robberies, why will my colleagues not support the President’s request to spend one ten-thousandth of the amount that families lost in the financial crisis on the SEC’s annual budget?
I challenge my colleagues who support this bill to commit to supporting the President’s request to increase the SEC’s budget.
I remind them again of the high cost of inaction, which led to far too many of our constituents losing their homes, retirement funds, and small businesses a few years ago. By shortchanging the security of our financial markets my colleagues are endorsing the same path. I urge my colleagues to oppose this bill.”