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Hillary Clinton Campaign Press Release - Senator Clinton Calls for Immediate Action to Strengthen Financial Market Regulation and Help Keep Families in Their Homes

March 31, 2008

Today, Hillary Clinton called on the Administration to move beyond the principles and long-term recommendations in its blueprint for financial market regulation and to focus on proactive, pragmatic actions that it could take with Congress to shore up our housing and credit markets, restore confidence, and keep millions of families in their homes.

While Senator Clinton appreciates and agrees with some of the recommendations in the Administration's plan, she believes it is too short on action. Ensuring effective functioning of our financial markets is not solely an issue of how we rearrange the chairs that regulators sit in; or who the regulators report to. It's also about what the regulators are mandated to do, and whether they act. It's about leadership to both establish a 21st century regulatory framework and appoint regulators who are committed to enforce new and existing rules that help maintain stability and avert crises.

To help move the debate beyond words, working groups and white papers, Senator Clinton called for six immediate steps to strengthen regulation of our financial markets and address our immediate housing and credit crises.


  • Establish a federal minimum standard for mortgage originators, including subjecting mortgage originators to minimum licensing, supervision and capital requirements, and bringing mortgage bankers more fully under the scope of the Community Reinvestment Act.
  • Immediate action to enable more effective near-term management of systemic risk, which would, at minimum, subject all institutions that are eligible to access the Federal Reserve's credit to regulations equivalent to commercial banks.
  • More transparency and oversight of new, exotic financial products like complex derivatives that have exploded in recent years, including ensuring that financial institutions which hold, or are parties to, complex instruments like collateralized debt obligations and credit default swaps are subject to minimum capital requirements.
  • Strengthen the independence of, and reduce conflicts-of-interest for, rating agencies.
  • Strengthen consumer protections for credit cards and student loans with an immediate annual interest rate cap of 30 percent on all credit cards - and a directive to regulators to work toward a lower cap.
  • Immediate action to keep families in their homes by pushing forward on Representative Frank and Senator Dodd's legislation to expand the FHA's capacity to guarantee restructured mortgages and by standing ready to have the Federal Housing Administration purchase at risk mortgages to help unlock our mortgage market and keep families in their homes.

Senator Clinton Calls For Immediate Action To Strengthen Financial Market Regulation And Help Keep Families In Their Homes


  • Establish a federal minimum standard for mortgage originators. At the heart of the current housing and credit crisis is the widespread practice of mortgage brokers and mortgage bankers who made bad loans and passed them off their books with little responsibility to borrowers or the communities in which they operate. The Administration's call for a Commission to address this issue is too little, too late. Senator Clinton has already called for tough new federal licensing standards for mortgage brokers. Today she called for:

    1. Legislation to subject all mortgage originators to the same type of regulations that banks are subject to, including minimum licensing, supervision and capital requirements;
    2. A new affirmative duty on mortgage originators to determine whether a borrower has the capacity to repay;
    3. Minimum requirements for state investments in enforcement capacity to ensure that those standards are actually enforced;
    4. Bringing mortgage bankers more fully under the scope of the Community Reinvestment Act to strengthen their ties to the communities in which they operate.


  • Immediate legislation to enable more effective near-term management of systemic risk. While Senator Clinton appreciates the Administration's willingness to endorse the idea of a market stability regulator, they are trying to solve an immediate crisis with a long-term proposal. By their own account, this proposal is not likely to be acted upon until after the Administration has left office. Today, Senator Clinton called on Congress to:

    1. Immediately act to provide the Federal Reserve and Secretary of the Treasury with temporary authority to require reports, promulgate regulations and guidelines-including capital and margin requirements and guidelines on leverage and risk management-and take appropriate enforcement actions with respect to not only institutions accessing the Fed's credit but also those that pose a systemic risk.
    2. Require the Treasury and Fed to issue new rules within 90 days. These rules should, at minimum, subject all institutions that are eligible to access the Fed's credit to regulations equivalent to commercial banks.
    3. This action would address our immediate crisis while allowing adequate time for careful consideration of proposals for broader and more permanent management of systemic risk. Such proposals should be designed in consultation with global regulators to ensure that the new rules both contain global systemic risk and maintain the international competitiveness of U.S. financial services institutions and other US businesses.


  • More transparency and oversight of new, exotic financial products like complex derivatives that have exploded in recent years. Senator Clinton called today for:
  • Ensuring that financial institutions that hold, or are parties to, complex instruments like collateralized debt obligations and credit default swaps are subject to minimum capital requirements. This action should be phased in over an appropriate period, and with appropriate consultation with national and international entities. Action should be based on the principle that capital requirements related to risk should be applied to all bank-like institutions that issue credit. In addition, we should consider subjecting the buyers of complex financial instruments to margin requirements similar to those that already apply to the buyers of stocks.
  • Strengthen independence and reduce conflicts-of-interest for rating agencies. Senator Clinton believes we should do more than simply study conflicts of interest involving rating agencies. She is calling on the SEC to take immediate action to either:

    1. Change the existing compensation structures where rating agencies are paid by the institutions they rate; or
    2. Require new, affirmative steps to enhance rating agency independence and accountability. Such action could include requiring rating agencies to certify that their rating practices adhere to independence standards adopted by the SEC; empowering an independent Risk Committee with no financial incentive to rating agencies to review rating decisions; or establishing independent rating agency Ombudsman approved by the SEC.


  • Strengthen consumer protections for credit cards and student loans. Senator Clinton has laid out detailed proposals for greater consumer protections in the areas of credit cards and student loans. Today, she urged Congress to take immediate action:

    1. Immediately impose a national annual interest rate cap of 30 percent on all credit cards - not just the stated rate, but the effective rate.
    2. Direct the OCC to work toward an even lower interest rate cap.
    3. Enact a Student Borrowers' Bill of Rights that will require lenders to clearly state in easy-to-understand language: the annual interest rate and what that means over the life of the loan; monthly payment; length of the loan; and fees and interest rate increases that will occur if a student fails to make on-time payments.


  • Immediate action to keep families in their homes. Senator Clinton believes we cannot let a discussion about rearranging the deck chairs of financial market regulation to distract us from the fact that right now the value of families' most valuable asset is falling and thousands of families are receiving foreclosure notice.

    1. Senator Clinton believes we should push forward on legislation designed by Representative Frank and Senator Dodd to expand the FHA's capacity to guarantee restructured mortgages. But given the depth of the crisis, Senator Clinton has made clear that we must also stand ready to have the Federal Housing Administration purchase at risk mortgages to help unlock our mortgage market and keep families in their homes.
    2. We need a second stimulus with $30 billion for states and localities to help fight concentrated foreclosures.
    3. We need to immediately pass legislation Senator Clinton announced last week and will introduce on Monday to clarify the legal obligations of mortgage servicers that help at-risk borrowers restructure their mortgages.

Hillary Clinton, Hillary Clinton Campaign Press Release - Senator Clinton Calls for Immediate Action to Strengthen Financial Market Regulation and Help Keep Families in Their Homes Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/297023

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