Northwest Herald - Bean Reflects on Journey Toward Financial Reform
PUBLISHED: July 22, 2010
(by Chris Freeman) Nearly two years after Lehman Brothers' bankruptcy, the financial reform bill that U.S. Rep. Melissa Bean helped craft was signed into law Wednesday by President Obama.
"I'm really proud of the work we've done," the Barrington Democrat said. "It's a very balanced bill."
Before Bear Stearns collapsed. Before Lehman Brothers' bankruptcy brought the markets to its knees. Before the Great Recession had been coined. In the fall of 2007, U.S. Rep. Melissa Bean, D-Barrington, was among the lead sponsors for a mortgage reform bill presented to the House of Representatives. The bill was introduced in October that year and passed in November, by a 291-127 vote.
"When house prices fall, when access to credit tightens, those dreams are threatened," Bean said at the time. "And for some, dreams are destroyed by foreclosure."
The mortgage reforms were sent to the Senate in December, but they got no further. Congress began hearings in 2008 over the financial industry woes, spurred by Bear Stearns in March and reignited in September with the demise of Lehman Brothers.
Bean saw a chance to be involved in the reshaping of the financial industry. As co-chairperson of the New Democrat Coalition's Financial Services Task Force, Bean helped craft 21 principles for financial reform.
Those principles were released at a news conference in February 2009, and in one shape or another, nearly every one is addressed in the financial reform law that was signed by President Obama on Wednesday, with Bean among those in attendance.
"It took a long time to get done," Bean said this week. "I thought we would do it in pieces, but they were all so complex that we had to have hearings on all of the issues - mortgage reform, derivatives, bank oversight, consumer protections. It took a lot of time to do the hearings and get the testimony, and then it was a lot of work to be done on finding the proper balance."
Bean is joined by Rep. Bill Foster, D-Batavia, on the New Dems task force, while Rep. Don Manzullo, R-Egan, is a member of the House Financial Services Committee that includes Bean and Foster and wrote the House version of reform.
Nearly two years after Lehman's bankruptcy, and almost three years after Bean helped introduce mortgage reform to the House, Bean said she was pleased with the final product.
"I'm really proud of the work we've done," she said. "It's a very balanced bill - when you're hearing people say it's too tough, and then others saying it's not tough enough, you know you've struck a good balance. ... I don't think there was a question about what needed to be done, it was just a matter of how to do it."
The bill required bipartisan support to get through Congress, although only three Republicans in each chamber crossed party lines to support the final version.
"I was so glad to see the Senate get consensus," Bean said. "This is very good for Americans, who have been asking for movement on Wall Street reforms. The public has demanded it since they've seen their savings go - their college savings, their pensions, their homes, their businesses. This has been the No. 1 thing I've been hearing since the crisis."
The package includes reforms to the mortgage and credit rating industries, a systemic risk council to keep an eye on larger industry concerns, a consumer protection bureau created to prevent abusive practices, and new liquidation procedures that put the eventual cost of folding a company on others in its industry.
"It will provide protections people need to have in place, it will keep abusive practices out of mortgages and create reforms that don't set people up to fail," Bean said. "Credit rating agencies will have liability, and we removed their inherent conflict of interest. And there are no more taxpayer bailouts. The cost of liquidating assets are borne by the industry, not the taxpayers."
Bean gained visibility late in the conference committee process, when news outlets quoted her frustration over proposed late changes in the final version of the bill. For her part, Bean smiled and said she was just trying to get some work done late into the night.
"It was late and I was talking to senators, trying to keep some of our individual parts in the bill, and the press wanted to talk and I'm like, ‘I'm kind of busy here.' And they would say, ‘I'm just trying to do my job.' And I was like, ‘So am I!'" Bean said.
It was among the things Bean said she learned in the process, particularly the close ties between the two chambers on major legislation.
"You've got to get champions there for your work," she said of the Senate. "The small business lending bill that I'm a co-sponsor of, I've been working with Sen. [Mary] Landrieu [D-Louisiana] so that when it comes back, it's already got House support.
"You have to be working with the other body all the time. And I found out that they're receptive when you go to them."
She also said she learned plenty throughout the process about derivatives, the hedging financial devices that largely were responsible for the bailout of AIG.
"I've always been a promoter of accountability and transparency, and I learned through this legislation how the lack of transparency, specifically of the over-the-counter shadow markets and a lack of regulatory oversight of derivatives, really was at the heart of how this challenge became a national crisis," she said.
Bean said there would be tweaks to the reforms in the future, but that basic protections would start the moment the president signed the bill. It was a moment she was anticipating.
"I'm definitely looking forward to joining the president to sign these historic reforms," she said.
