Action Alert – Contact your Senators on S.3217, Restoring American Financial Stability Act of 2010

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On Monday the Senate will resume consideration of the motion to proceed to S.3217, Restoring American Financial Stability Act of 2010 . The 1400 page bill has a lot wrong with it – and it’s important to call our Senators and tell them to vote NO.

Here is an excellent article by an analyst at Heritage Foundation on 14 Fatal Flaws. I suggest you read through it prior to contacting Senators Nelson and LeMiuex with the contact information provided further down. All the points are excellent – but to me #14, without any of the other points, would make this bill a non-starter!

Senator Dodd’s Regulation Plan: 14 Fatal Flaws
Published on April 22, 2010 by James Gattuso

The Senate is expected to take up a proposal, originally authored by Senator Chris Dodd (D–CT), to reform the financial regulatory system in the U.S. The goal is clear: to minimize the chances that another financial crisis—and bailouts—will arise again.

The objective is a good one. Unfortunately, the 1,408-page bill includes numerous provisions that would hurt—not help—consumers and the economy. It would even make another financial crisis or bailout more likely to occur.

Fourteen Flaws

Among other things, the bill:

1. Creates a protected class of “too big to fail” firms. Section 113 of the bill establishes a “Financial Stability Oversight Council,” charged with identifying firms that would “pose a threat to the financial security of the United States if they encounter “material financial distress.” These firms would be subject to enhanced regulation. However, such a designation would also signal to the marketplace that these firms are too important to be allowed to fail and, perversely, allow them to take on undue risk. As American Enterprise Institute scholar Peter Wallison wrote, “Designating large non-bank financial companies as too big to fail will be like creating Fannies and Freddies in every area of the economy.”[1]

2. Provides for seizure of private property without meaningful judicial review. The bill, in Section 203(b), authorizes the Secretary of the Treasury to order the seizure of any financial firm that he finds is “in danger of default” and whose failure would have “serious adverse effects on financial stability.” This determination is subject to review in the courts only on a “substantial evidence” standard of review, meaning that the seizure must be upheld if the government produces any evidence in favor of its action. This makes reversal extremely difficult.

The complete article can be found here: Senator Dodd’s Regulation Plan – 14 Fatal Flaws

The bill can be found here.

Contact our senators:

LeMieux, George S. – (R – FL) Class III
356 RUSSELL SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-3041
email Senator LeMieux

Nelson, Bill – (D – FL) Class I
716 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-5274
email Senator Nelson