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Bachus: Senate Regulatory Reform Proposal Yet Another Missed Opportunity for Real Reform

WASHINGTON, March 15, 2010 -

- House Financial Services Committee Ranking Member Spencer Bachus today said the financial regulatory reform legislation introduced by Senate Banking Committee Chairman Chris Dodd is yet another missed opportunity to restore market discipline and end the "too big to fail" philosophy that rewards failure.

Bachus specifically noted the failure of Senate Democrats to (1) refocus the mission of the Federal Reserve back to monetary policy and to (2) create any proposals addressing the future of Fannie Mae and Freddie Mac. 

"We're witnessing double digit unemployment, skyrocketing national debt, and an eroding financial environment that cannot sustain this level of spending.  The Senate Democrats' proposal doesn't tackle the most fundamental areas of reform to fix what caused this mess," Bachus said.  "If the Senate is serious about meaningful financial reform, they will focus on the areas that caused the crisis in the first place and commit to ending the bailouts, terminating TARP, and keeping the government out of picking winners and losers."

The House Republican regulatory reform plan directed the Federal Reserve to return to its core mission of conducting monetary policy and relieved it of other regulatory and supervisory responsibilities by reassigning them to other agencies.

"It's crucial that we get bank supervision right, but this Senate plan gets it wrong.  The Fed needs to first focus on monetary policy without taking on further responsibilities that could distract them from their primary role," Bachus added. 

Additionally, Dodd's legislation lacks any proposal to restructure the role of Government Sponsored Enterprises (GSEs), which accounts for 90 percent of mortgage financing.   

"What's most alarming is there's nothing addressing the failures of Freddie and Fannie that led to the mortgage meltdown," Bachus continued.  "The fact that GSE reform isn't included raises serious concerns about the effectiveness of regulatory reform on restoring stability to the financial markets and promoting economic recovery."

Note: House Financial Services Committee will hold a hearing this Wednesday on Fed Supervision and Monetary Policy with Federal Reserve Chairman Ben Bernanke and former Chairman Paul Volcker.  A hearing is scheduled next week on the Future of Housing Finance with Secretaries Geithner and Donovan, during which committee Republicans will question the Administration on their lack of efforts to develop a concrete plan for GSE reform

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