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WASHINGTON, DC – Today, U.S. Senators Maria Cantwell (D-WA) and Joe Lieberman (ID-CT) sent the following letter to Senator Reid, Senator McConnell, Speaker Pelosi, Representative Boehner, Senator Dodd, Senator Shelby, Representative Frank, and Representative Bachus, asking them to ensure there are clear mechanisms for long-term transparency, accountability, and reform in the current financial recovery package. “Any financial recovery package that Congress enacts must put transparency and tough rules in place to make sure consumers are protected,”said Cantwell. “While the financial markets need emergency surgery today their long-term health is dependent on prevention. We need to establish a robust regulatory regime capable of overseeing today’s complex global marketplace. We also need to determine what went wrong, hold bad actors accountable and apply the lessons learned to prevent future financial market meltdowns.” “In addition to protecting homeowners and taxpayers and holding Wall Street executives accountable, it is critical that the financial rescue package jumpstart the process of fundamental reform of our financial markets so that we never again find ourselves in this position. Under our proposal, in four months, the National Commission for Financial Regulatory Reform will provide Congress with a specific plan for comprehensive reform of the financial system that will strengthen the stability of our financial infrastructure and protect the long-term interests of American taxpayers, investors, and businesses. With the Commission recommendations in hand, the next Congress will be able to immediately begin moving forward with the fundamental reforms we desperately need,” said Lieberman. [The text of the letter follows below] | The Honorable Harry Reid Majority Leader United States Senate | The Honorable Mitch McConnell Minority Leader United States Senate | | The Honorable Nancy Pelosi Speaker U.S. House of Representatives | The Honorable John Boehner Minority Leader U.S. House of Representatives | | The Honorable Christopher Dodd Chairman, Senate Banking Committee United States Senate | The Honorable Richard Shelby Ranking Member, Senate Banking Committee United States Senate | | The Honorable Barney Frank Chairman, House Financial Services Committee U.S. House of Representatives | The Honorable Spencer Bachus Ranking Member, House Financial Services Committee U.S. House of Representatives | Dear Senator Reid, Senator McConnell, Speaker Pelosi, Representative Boehner, Senator Dodd, Senator Shelby, Representative Frank, and Representative Bachus: We write to ensure that any legislation designed to mitigate the current turmoil in the financial markets include provisions that lay the groundwork for comprehensive regulatory reform and a mechanism to hold accountable the bad actors responsible for the current financial meltdown. We believe that the current regulatory regime governing oversight of the financial markets is inadequate and disjointed and has been too tolerant of excessive risk-taking masked by overly complex financial instruments. While we agree Congress must act decisively to restore confidence and access to capital in our financial markets, we must concurrently begin working to understand the structural and regulatory failures that led to the current financial crisis and help prevent further economic turmoil. It is essential we reestablish the transparency and federal oversight necessary for the markets to function properly. Figuring out how to permanently fix our nation’s complex financial markets will take some time, but we must guarantee the American people that it will happen. To that end, we recommend the following three proposals be included in any legislation destined to be enacted into law this year: 1) Create a National Commission on Financial Regulatory Reform to quickly recommend fundamental reforms to the federal regulation of financial markets. · A commission of financial experts and former government officials should be given a four month mandate to conduct a top-to-bottom review of our nation’s financial regulatory structure and to develop comprehensive recommendations for: 1) Reforming the laws governing our nation’s financial markets; 2) Strengthening and reconstituting regulatory agencies; and 3) Improving transparency and oversight. · The Commission should be directed to provide Congress with specific legislative suggestions for a rationalized regulatory framework that promotes greater stability, transparency, and efficiency of our financial system, while protecting the interests of investors, consumers, and taxpayers. 2) Establish a special joint Congressional oversight committee to investigate the causes of the current financial market meltdown. · Financial market transparency must be restored. Congressional leaders should name key Senators and Representatives to serve on a temporary House-Senate Joint Committee dedicated to understanding the root causes of the current financial turmoil and proposing corrective actions to the appropriate committees of jurisdiction. · The joint committee should receive investigative authority, including subpoena power, to help expose any misdeeds, manipulative schemes, or malfeasance by Wall Street executives and traders that may be responsible for the current financial crisis, as well as failures of federal oversight agencies to meet their regulatory responsibilities. Based on its investigations, and the results of the ongoing Federal Bureau of Investigations probe, the committee should provide recommendations on whether to establish or increase criminal and civil penalties for fraud or other efforts to manipulate financial markets. 3) Initiate a joint investigation and report by a task force of Inspectors General responsible for financial markets oversight. · Congress should establish a joint investigatory task force of Inspectors General of agencies and commissions responsible for oversight of financial markets (Securities and Exchange Commission (SEC), U.S. Treasury Department, Commodities Futures Trading Commission (CFTC), Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency (OCC), Office of Thrift Supervision (OTS), and Federal Deposit Insurance Corporation (FDIC)). · The task force should work collaboratively in a joint investigation of their respective agencies, using the forum of the President’s Council on Integrity and Efficiency (PCIE) and the Executive Council on Integrity and Efficiency (ECIE) to share findings with regards to ethics, conflicts of interest, oversight, and accountability. · The investigation should focus on whether revolving door relationships or other institutionalized conflicts of interest between regulators and their regulated entities may have affected agency decision-making between January 2002 and August 2008 and make their findings public. The report should include recommendations on how to improve and strengthen financial market regulatory agencies. We look forward to working with you to determine the root causes of the current financial meltdown and using that information to establish new rules of the road and a robust regulatory regime that will prevent future financial market crises. Sincerely, Maria Cantwell and Joe Lieberman # # #
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