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At Markup, Waters Blasts Measures Undermining Investor and Consumer Protections

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Washington, DC, May 7, 2014 | comments
At today’s full Committee markup on a number of pieces of legislation related to capital markets and financial institutions, Congresswoman Maxine Waters, Ranking Member of the Financial Services Committee, laid out a number of concerns with the measures being considered. Waters criticized the capital markets bills for eroding  transparency and investor protections, while also preempting state efforts to regulate securities. The Ranking Member also criticized the legislation related to financial institutions as harmful to regulator efforts that protect our nation’s consumers from abusive lending practices. In addition, Waters applauded Committee Chairman Jeb Hensarling for his wisdom in removing a subpoena resolution from today’s agenda. She noted that subpoenas are extraordinary measures, and underscored the additional “work that should be done prior to the issuance of subpoenas.” To date, Hensarling’s staff has yet to examine hundreds of pages offered for review by DOJ and Treasury.

Her full remarks are below. 

As prepared for delivery:

“Thank you, Mr. Chairman. Today we consider a number of pieces of legislation related to capital markets and financial institutions.

The measures dealing with capital markets make changes to securities rules that would erode the transparency and investor protections that long have been a staple of our financial markets, particularly in the wake of the massive collapse of the financial services sector in 2008.

These measures would reduce disclosure requirements and end certain restrictions on securities offerings – while ignoring how it would impact the quality or availability of information investors need to make decisions. And when it comes to capital formation issues, these measures further the Republican’s troubling pattern of ignoring the fundamental fact that capital formation is a balance between companies and investors. Favoring one – in this case companies – has the potential to undermine the confidence of investors, which significantly increases the long term costs for the very same companies and the entire US economy.

In addition, several bills preempt or prevent states from regulating securities – even where they play a lead role in protecting investors from fraud.

I have serious concerns with efforts to preempt state regulators, as well as with pursuing a piecemeal approach to changing the capital formation process. I believe we must not rush to take such dramatic action without a better understanding of how each of these bills interacts with the current offering process – and each other.

It is important that we preserve the information investors need to make decisions, protect the authority of the state regulators, and fight back against efforts to undermine the implementation of the Jumpstart Our Business Startups Act rulemakings – particularly before they even go into effect.

In addition, today we will consider five measures related to financial institutions – the majority of which, as currently written, water down important rules that protect our nation’s consumers from abusive lending practices.

Mr. Chairman, I’m concerned that while these bills are well-intentioned, they could open up cracks that will be used to significantly undermine consumer protection in the mortgage market, while increasing the administrative burden on financial regulators, some of which are already cash-strapped.

As we carefully consider ways to provide regulatory relief to small banks and credit unions, we must also remember it can be easy to overreach and undermine the consumers we were sent here to protect.

Thank you, I yield back.”

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