Target: Federal Reserve Bank of New York President William C. Dudley
Goal: Demand Congress and federal regulators enforce Dodd-Frank provisions holding big banks accountable
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) represented the most ambitious effort to regulate the financial sector in decades. According to a recent article in Mother Jones, “the law [was] designed to clean up the abuses that led to the financial crisis,” including curtailing excessive risk-taking behavior by investors and increasing transparency of the “shadow banking” industry. Almost three years after Dodd-Frank passed, however, “only about a third of the rules required by the legislation have been finalized so far, and even those are not going into effect as scheduled.” Indeed, Goldman Sachs, the financial behemoth widely derided for its intransigence and indifference during the crisis, has been granted a two year extension for Dodd-Frank implementation by the Federal Reserve. Demand that Congress and regulators hold these abusive, reckless financial institutions accountable.
The specific rules avoided by Goldman Sachs, among other financial institutions, require “FDIC-insured banks to move most of their derivatives trades into separate firms so that when a trade goes bad the bank will have to handle the fallout, not taxpayers.” Derivatives trading, it should be noted, provided much of the catalyst for the global financial meltdown. Such risk-concealing financial instruments exploded in popularity, but proved unsustainable. When derivatives’ prices plateaued and subsequently declined, they bankrupted numerous financial institutions who had borrowed heavily to get a piece of the “hot” market.
Mother Jones also notes that, while “there is a provision in the Dodd-Frank law that allows banks [such as Goldman] to request a two-year transition period… banks were already given three years to phase in compliance with the [new rules].” Marcus Stanley, from the financial reform advocacy organization Americans for Financial Reform, blasted the situation as “just a generalized excuse for postponing action.”
Goldman Sachs, along with “JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo, were granted two-year extensions on the same rule. [Altogether], those banks control more than 90 percent of the $700 trillion derivatives market.” These new developments represent a massive failing by regulators troublingly reminiscent of immediately pre-crisis problems.
Sign this petition condemning Federal Reserve regulators for these egregious failings and demand that they begin holding banks accountable to Dodd-Frank provisions immediately.
Dear Mr. Dudley,
Almost three years after Dodd-Frank passed “only about a third of the rules required by the legislation have been finalized so far, and even those are not going into effect as scheduled.” Indeed, many leading financial institutions – including many of those responsible for the 2008 global financial meltdown, such as Goldman Sachs, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo – have been granted extensions on implementing several key provisions in the Dodd-Frank law. What Marcus Stanley of Americans for Financial Reform calls “procrastination [by] regulators and the banks” might also be called collusion, and it must end.
According to the Congressional Financial Crisis Inquiry Commission’s report, the near-collapse of America’s banking system eliminated more than $10 trillion in American household assets and equity, sparked tremendous economic recessions globally and, inconceivably, was determined to be entirely preventable. Dodd-Frank was designed to correct many of these problems, protecting taxpayers and depositors from the reckless behavior of banking executives. Your unwillingness to implement a critical law must be corrected. You must hold banks accountable to minimal expectations of ethical behavior. Failure to do so will put the nation – and the world – in danger of repeating a preventable mistake all over again.
[Your Name Here]
Photo Credit: Sparkx 11 via Wikimedia