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Wall Street reform marks end of too big to fail

For months now, big Wall Street banks and investment firms have been spending $1.4 million every day to employ an army of lobbyists to do one thing: stop Congress from holding them accountable for the financial meltdown that cost 8 million American jobs and caused $17 trillion of wealth to simply vanish.

However, with the final passage of the Wall Street Reform and Consumer Protection Act last week, Democrats in Congress scored a major victory for Americans against the predatory lenders, unscrupulous credit card companies and Wall Street brokers who caused the worst financial crisis since the Great Depression.

The Wall Street Reform and Consumer Protection Act enacts tough, common-sense reforms that protect consumers and end the era of "too big to fail." The new law creates a new Consumer Financial Protection Agency to protect families and small businesses by ensuring that bank loans, mortgages and credit cards are fair, affordable, understandable and transparent.

Unscrupulous practices by credit card companies, like arbitrarily adding fees and raising interest rates, are now banned. They will no longer be allowed to send you a bill a day before it is due and then charge a late fee because your payment arrived late.

Federal regulators now have the authority to seize and dismantle large banks and brokerage firms before they threaten the financial health of the nation. Taxpayers will never again be asked to pay for the reckless behavior of big bankers and Wall Street CEOs.

Other reforms will ensure that Wall Street does not gamble with your money. Complex financial products like credit default swaps and derivatives trades that contributed to the financial meltdown now will be subject to common-sense rules and regulations, just like the stock market is. The Securities and Exchange Commission has been given more authority to oversee hedge funds and private equity funds.

Pete Rose was thrown out of baseball for betting against his own team. But on Wall Street, big banks and investment companies raked in billions by dealing in home loans to people who couldn't afford to pay them back and then made bets that those families would go into foreclosure.

The major credit-rating agencies made their own contribution to the meltdown by failing to scrutinize the financial products and giving ratings that did not reflect their value. New oversight and transparency rules will ensure that those ratings have value.

Finally, it was important to me to ensure that banks on the main streets of northeastern Minnesota did not pay the price for the misdeeds of Wall Street. I fought hard to ensure that this law targets those who were at the heart of the problem. Federal Deposit Insurance Corporation rates have been readjusted so premiums are lower for banks on Main Street and higher for banks on Wall Street.

Just as a driver with a bad driving record pays higher car-insurance premiums, big financial institutions will see their rates go up.

I also met with community bankers and credit unions to address their concerns about new fees and regulations that will benefit consumers.

This new law is an important first step toward common-sense reform of our financial markets. But if the meltdown taught us anything, it taught us that big banks and Wall Street investors exist to generate profits for investors and not to protect consumers. It is the job of Congress to remain vigilant on behalf of the American people.

Jim Oberstar, DFL-8th District, is a member of the U.S. House.