There's an old expression for gamblers: ‘the House always wins.' Whether the gambler wins or loses, the casino always makes money. For too long Wall Street has gambled with our economy and gotten rich off the backs of hard-working American families.
After they brought our financial system to its knees, Wall Street executives walked away with multi-million dollar compensation packages. Now that our economy is beginning to show signs of recovery, it's time to change the rules of the game so that this kind of thing won't happen again. We need better oversight and accountability on Wall Street. We need transparency in the derivatives market, and we need to give regulators the authority to break up failing banks so that institutions will never again be ‘too big to fail.'
As much as I hated the idea of bailing out a failing industry, in 2008 if we had let the big banks go under our country's economy would have collapsed entirely. That's why you saw John McCain, Barack Obama, and Kit Bond all agree that the financial rescue package was necessary. And although the government has been repaid most of the bailout money with interest, we need to now turn our attention to preventing future bailouts.
For too long, big banks and credit card companies have held all the cards, and that can't continue. As the Senate considers Wall Street reform legislation in the next few weeks, I will be looking for some key measures to be included in any legislation so that American taxpayers are never again left holding the bag for Wall Street.
Banks must be held accountable for their risky behavior. Because the Federal Deposit Insurance Corporation (FDIC) couldn't intervene with big investment banks as they can for smaller banks, Congress was forced to choose between providing financial assistance or facing complete collapse of our credit markets nationwide. By giving the FDIC the authority to take over and break up failing financial institutions, to replace the management and to ensure that responsible parties bear the losses, we can move away from the idea of ‘too big to fail.'
We also need to properly monitor and constrain risk-taking at the largest Wall Street firms. America has grown and thrived because of our ability to invest in good ideas and good people. That fundamental principal should never change, but we simply can't allow big banks to abuse the system by taking enormous risks with our economy.
The rules we are proposing are common sense. Banks shouldn't be allowed to leverage 30-1 bets with money they don't have. We need to bring transparency and accountability to the derivatives markets, ensuring that complicated, exotic financial transactions are transparent, and that both parties have the capital to make good on transactions.
During my recent small business roundtables around Missouri, I heard repeatedly from community bankers that they are nervous about any increase in regulation. I am doing my best to make sure that we don't increase the burden on the small guys who are already highly regulated and who didn't cause this crisis in the first place. Rather, this is about leveling the playing field for the small community banks by making sure that big banks and other non-bank financial institutions can't continue to game the system.
After experiencing this economic recession and seeing how it is affecting average people's pensions and small businesses' ability to get loans, it's clear to me we can't afford to let Wall Street go back to the same old tricks. Big banks have got to start putting some skin in the game for the risks they're taking. It's time to stop selling America short.