Avoiding A Second Economic Collapse: The Need For Financial Reform
Madam Speaker, the global economy is increasingly interconnected. The current economic crisis may have begun in the United States, but it rapidly spread throughout the world. Now as we stand on the cusp of a sustained economic recovery, we…
Madam Speaker, the global economy is increasingly interconnected. The current economic crisis may have begun in the United States, but it rapidly spread throughout the world. Now as we stand on the cusp of a sustained economic recovery, we must be mindful of the ripple effects and guard against further threats to our economy.
Last Thursday's historic stock market plunge, initially precipitated by Greece's economic uncertainty, must serve as a stark reminder of what happens when you don't have adequate protections in place. Without proper oversight, Madam Speaker, our financial markets are dangerously exposed.
In the financial chaos that erupted last Thursday, shares of Accenture swung from $40 to one penny and back to $40. Shares of Procter & Gamble traded for $54 on the New York Stock Exchange but only $39 on the NASDAQ. Those aren't market forces at work. Those are market forces that are broken. Almost 300 trades made under questionable circumstances had to be subsequently canceled by the trading houses. Such wild disparities highlight the dangers of a marketplace left largely to its own devices and the tremendous risk posed to our economy and those who invest in it.
The recession of 2007 began in the financial sector. Its effects were widespread. Millions of Americans lost their jobs. Millions more had their homes foreclosed. Millions more lost their retirement savings, college funds, and emergency reserves. In fact, American households cumulatively lost $17.5 trillion in aggregate household wealth in the recession.
Now it's true, Madam Speaker, that we're seeing signs of an economic recovery. The Nation's gross domestic product is once again growing at the rate of 5.6 percent in the last quarter of 2009 and another 3.2 percent in the first quarter of this year. After 2 years of job losses, culminating with 741,000 jobs lost in January of 2009, we're finally in the midst of our fourth straight month of job growth, even though the other side of the aisle can't accept good news when they see it. More than 290,000 jobs were created last month, the most since March of 2006. Despite the recent uncertainty, the stock markets are up more than 50 percent since their March 2009 lows.
But it is that lingering uncertainty that we have sought to address with our actions in this Congress. Similar financial sector problems came to a head in 2007, leading to the worst economic recession since the Great Depression. And as last Thursday reminded us, we're still at risk to financial sector uncertainty. Responsible Wall Street reform remains one of the critical components of a sustainable economic recovery.
Madam Speaker, with such an obvious need for reform, why hasn't it been implemented already? Why, for example, is the more than $700 trillion--that's trillion with a ``T''--derivatives market still completely unregulated? We must ensure that this highly speculative market is brought out of the shadows and operates with transparency and responsible oversight. Why are the American taxpayers still faced with the possibility of bailing out financial institutions deemed ``too big to fail?'' Never again should private risk become a public responsibility.
I was proud to join a majority of my colleagues in this body in supporting passage of Wall Street reform last December to address these systemic problems and protect American families and their savings. We provided for regulation of the shadowy derivatives market. We brought accountability and transparency to the financial sector. We ended the practice of ``too big to fail.'' We established safeguards to ensure that the abuses of the past are never again repeated. Madam Speaker, the House made Wall Street reform a priority.
Although the Senate finally began its own deliberations a few weeks ago, the process thus far has been slow. I am encouraged to see bipartisan negotiations on the bill after a failed filibuster attempt by the minority. After last week, can there be any doubt that we need Wall Street reform now?
Every day of delay is one more opportunity for a recurrence of economic uncertainty and even collapse. Last Thursday's roller coaster on the stock market was a clear reminder that we cannot allow a continued and willful lack of responsible oversight to expose American families, American business, and our whole economy to such potential risk. Madam Speaker, we must have Wall Street reform now.