SAN FRANCISCO — It's not just the numbers that cry out for reform of the financial services industry, but it's the faces as well, U.S. Sen. Barbara Boxer said Monday.
The senses are easily dulled by the enormous numbers of recent years' economic calamity — $360 billion in lost wages, 5.5 million jobs lost, 500,000 homes foreclosed upon, $3.4 trillion in lost real estate wealth, $7.4 trillion in lost stock wealth — but individual people's stories tell a vital tale, Boxer, D-Calif., said at a news conference.
So she presented Joe Ruiz, owner of Rhapsody Painting in San Francisco, who spoke of having his small business's line of credit revoked by Citibank over what he called a technical issue, leaving the 15-year-old business to lay off several of its longtime workers and still struggle to survive.
Even after a public bailout, banks are using "any excuse to cut back the credit of small businesses" which are the nation's vital job creators, Boxer said. The reform bill now being debated by the Senate would provide increased oversight through an independent Consumer Financial Protection Bureau tasked exclusively with shielding people and small businesses, she said.
She presented Matt Kilgore of Rohnert Park, who said he got sucked into signing for a student loan to attend a helicopter-pilot training school which later went bankrupt, leaving the lender to tell him, "Sorry the school closed but you owe us $80,000 now."
Boxer said too many people get left holding the bag for shady lending practices. "Reasonable rules of the road — that's all we're asking for."
Maeve Elise Brown, executive director of Oakland-based Housing and Economic Rights Advocates, spoke about the many homeowners who got pushed or misled into loans far more expensive than what they could afford by unscrupulous lenders interested only in padding their fees. "They found their trust was completely misplaced."
Besides the Consumer Financial Protection Bureau, Boxer said the bill under debate would curb financial institutions' risky behavior by enacting strict new capital and borrowing requirements; create a Financial Stability Oversight Council to provide an early-warning system for financial industry instability; improve funding and management at the Securities and Exchange Commission to protect against market scams; eliminate loopholes that let reckless speculative practices go unseen; and forbid any further taxpayer bailouts.
That last one is vital, she said, citing the 96-1 vote by the Senate last week on her amendment providing that all financial companies put into receivership under the reform law shall be liquidated, with no taxpayer funds used to prevent such liquidation; only disposition of the company's assets or a tax or fee on the financial industry could be used.
Boxer said she's working on another bill with U.S. Sen. Jeff Merkley, D-Ore., aimed at stimulating smaller, community banks to extend more credit to small businesses.
Boxer flew back to Washington later Monday; today she'll convene a hearing of the Senate Environment and Public Works Committee to examine economic and environmental issues surrounding the BP Deepwater Horizon oil-spill disaster in the Gulf of Mexico.
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