Silvers: We Need Comprehensive Financial Reform
AFL-CIO Director of Policy Damon Silvers has a prescription for moving our economy forward: Make the financial sector the servant of the real economy—not its master.
Silvers debated American Bankers Association President Edward Yingling on the need for financial reform in a hard-fought discussion at the Aspen Institute yesterday, and the differences between the two were most apparent when it comes to protecting consumers and applying stronger rules to banks, credit cards and the mortgage industry.
Silvers, who sits on the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP), says we cannot allow the financial industry to drive our economy into the ground again. We must have new, tough regulations that protect consumers and put the financial sector to work for the real economy. And we absolutely can’t bail out the CEOs and stockholders of failed banks.
‘Too Big to Fail’ Banks Need Tough Regulation
While the rescue of the nation’s top financial institutions was necessary, the rescue must be accompanied by strong action now to rein in the same institutions that caused the global financial crisis in the first place, several experts said today.
During a forum sponsored by the Economic Policy Institute (EPI), panelists pointed out that the nation’s four largest bank holding companies control nearly half of the bank assets in the country—almost double the amount they controlled in 2002—not a good situation for our economy.
The biggest threat: All these banks are carrying billions of dollars in bad debts. Their weak balance sheets make them hesitant to lend—the so-called zombie bank phenomenon. But their financial weakness is paired with political power, power that may not be consistent with our democratic principles, says Damon Silvers, deputy chair of the Congressional Oversight Panel (COP).
