Walt Minnick: We need financial reform, but we need to do it right

Throughout my decades as an Idaho business leader, I always made sure I could look my associates in the eye and explain every decision.

That's why my managers would share motel rooms, rent economy cars and get the same health insurance as the newest file clerk. That's why when times got tough I cut my salary first and most before I asked anyone else to sacrifice.

These values are why I ran for Congress, and why the people of Idaho are giving me a chance to serve them in Washington.

These values are why I voted to force lenders to re-negotiate mortgages, why I voted to reform the unscrupulous practices of credit-card companies, why I voted to expand prosecutions of corporate fraud, why I voted to crack down on government waste and why I voted to give women new rights to challenge unequal pay. It's also why I demand an end to the excessive millions paid to out-of-touch Wall Street CEOs.

These values have shaped how over the last nine months I have helped write landmark legislation to overhaul the way we regulate Wall Street and the financial industry, to keep them from ever again bringing our economy to its knees.

Countless hours in hearings and meetings with my fellow members, with financial experts, with regulators and with officials from the administration have resulted in legislation that is nearly complete. By year's end, Congress will vote on a sweeping bill which will include a host of reforms, including two portions I was privileged to have written: regulations for the complex derivatives market and a measure to force lenders who sell their loans to share in any losses if those loans go bad.

I strongly support this financial reform bill, which in most respects will reflect approaches proposed last summer by the president and his financial advisers.

However, in some areas the administration has been too timid with its regulatory reform, and in those areas I have worked to strengthen the proposals. For example, I seek to consolidate four overlapping federal bank regulators into just one agency, and two securities regulators into a single, more effective organization.

The administration proposal would keep most of the current framework, a framework which has been proven ineffective. It allows two agencies to continue overseeing derivatives rather than one, and allows big banks to continue "shopping" for the regulator that will have the least oversight.

I also am working for stronger and more uniform regulation to help better protect consumers - whether they deal with a local payday lender or a big Wall Street bank. We can do it, however, in a more effective, simple way than creating the new Consumer Financial Protection Agency proposed by the president.

We get better protection if we have fewer federal agencies with broader responsibilities.

Every regulation impacts both a bank's profitability and how well it serves its customers. To create two regulators for every bank and other financial institution - one trying to keep it sound financially and another to protect its customers from abusive loan practices - will lead to conflict and paralysis. It also will increase the burdens on the small banks that are the primary sources of credit for homeowners and small businesses in my district desperately trying to create new jobs and get us out of this recession.

Unfortunately, my common-sense solution has been attacked by those, including this paper's editorial board, who do not understand why my solution will be stronger, simpler and better for Idaho's financial institutions and their customers than what the administration has proposed.

We will not reform Wall Street by adding new, overlapping federal agencies, creating new turf wars and continuing to run the risk that gaps will form.

We must protect consumers and prevent future speculators from finding new ways to bring this nation to the brink of economic ruin.

Idahoans want me to make sure that government plays an appropriate, limited but effective role. They want Congress to punish those who caused this mess, fix the problems so it doesn't happen again and then get out of the way to let free enterprise work.

That's what I want, too.

Rep. Walt Minnick represents Idaho's 1st Congressional District.