Menendez Helps Wall Street Accountability Legislation Pass Banking Committee

Menendez Helps Wall Street Accountability Legislation Pass Banking Committee

Bill contains a number of provisions championed by Menendez (LIST INCLUDED)

WASHINGTON - U.S. Senator Robert Menendez (D-NJ), a member of the Banking Committee, today voted in favor of Wall Street accountability legislation as it passed the committee by a 13-10 vote. No Republicans voted in favor of the legislation, which would set new rules for financial activity on Wall Street to rein in irresponsible behavior in order to prevent another financial meltdown such as the one that caused the recent recession.

"We are one step closer to the type of accountability on Wall Street that families on Main Street have been waiting for during these tough economic times," said Menendez. "The bill we passed is a good starting point from which we can work in the full Senate, and I applaud Chairman Dodd for including a number of family protection provisions that I championed. When all is said and done, I expect that we will pass legislation that reins in the type of reckless financial behavior that has cost millions of Americans their jobs, homes and nest eggs."

Provisions in the Dodd bill that Menendez requested:

  • Municipal bond ratings (helps local governments finance job-creating projects): requires credit rating agencies to use a universal standard for corporate and municipal bonds.
  • Off-sheet balance activity (relates to the type of accounting gimmicks Lehman Brothers used): requires regulators to take all off-balance sheet activities into account when calculating capital and other requirements.
  • Avoiding systemic risk: requires financial regulatory agencies to produce regular reports on how they are using capital and liquidity standards to avoid systemic risk.
  • FDIC remains regulator for community banks
  • Disclosure of CEO-to-worker pay ratio: requires publicly-listed companies to disclose in their annual SEC filing the amount of CEO pay, the amount of the median company worker pay, and the ratio of the two.
  • Prohibiting brokers from voting client shares on key compensatory issues: prohibits brokers from voting uninstructed client shares in votes on "say on pay" and other significant decisions as determined by the SEC.
  • Permanent financial education program: Creates a permanent Financial Education and Counseling Program that makes grants available to community groups to provide education.

Provisions in the Dodd bill that partially address Menendez requests:

  • Pre-funded crisis fund (ends need for future taxpayer bailouts - Menendez is author of the Ending Taxpayer Bailouts by Making Wall Street Pay Act, Requires risky firms to pay into a fund that would be available to wind down any risky firm that fails. Assessments would be based on the risk posed to the system. In the case of failure, shareholders would pay first; the fund would be used only to prevent spillover effects of a failure and wind down the firm, not to bail out a firm or keep it going.
  • Inspector General reform at federal financial regulatory agencies: Requires Presidential appointments and Senate confirmation of Inspectors General at financial regulatory agencies; requires financial regulators to respond when Inspectors General identify deficiencies - either by taking corrective action or explaining to Congress why they are not; requires Inspectors General to report to the board of the organization rather than the head of the organization; requires publication of any negative recommendations from the Inspectors General's peer review of other Inspectors General's work.
  • Whistleblower protections: Amends the Sarbanes-Oxley Act to improve anti-retaliation protections for whistleblowers by expanding protection to cover whistleblowers at subsidiaries and affiliates of companies.


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