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             U.S. Senator Susan Collins today voted in favor of financial regulatory reform legislation that successfully passed the Senate.  This bill contains several provisions that were authored by Senator Collins, including core provision from a regulatory reform bill which she introduced in March 2009. 

            Following the final vote, Senator Collins released this statement:

"In the fall of 2008, America faced an unprecedented upheaval in financial markets that triggered the deepest recession in decades.  For several years, the financial sector had been gambling on the continued rise of the housing market, yet no single regulator could see that everyone was betting on a bubble that was about to burst.  Instead, each agency viewed its regulated market through a narrow lens, missing the total risk that permeated our financial markets.

"The crisis on Wall Street was created by firms that concocted complicated financial instruments that ended up backfiring.  Investment firms like Bear Stearns borrowed to the hilt despite not having the resources to back their high-risk strategies.  And it has been the American taxpayers and individual investors who have paid the ultimate price.  Millions of jobs vanished; credit for consumers and businesses evaporated; retirement accounts lost money-and the American people, rightfully so, became frightened and angry about bailing out huge irresponsible financial firms.

"It is important that we do all we can to help prevent this kind of crisis from ever happening again.  That is why I supported financial reform legislation that passed the Senate today-the biggest overhaul of our financial laws since the Great Depression.

"As a former Maine financial regulator, I am convinced that Congress needed to pass legislation that fundamentally restructures our nation's outdated financial regulatory system to prevent future taxpayer bailouts, strengthen oversight and accountability, and guard against the excesses that contributed to the deep recession that has cost millions of Americans their jobs.  America's Main Street small businesses, homeowners, employees, savers, and investors deserve the protection of an effective, new regulatory system that modernizes regulatory agencies and sets safety and soundness requirements for financial institutions to prevent excessive risk-taking.  This reform will help ensure that high-risk financial products and practices can be detected in the future and effective actions taken to prevent the contagion from spreading to otherwise healthy financial institutions and markets.

"A core provision of the bill creates a council of regulators, the Financial Stability Council, to serve as a systemic-risk monitor, similar to legislation I introduced in March 2009.  This Council will identify financial institutions, practices, and products that pose a risk to financial markets or to our economy, such as the lax mortgage lending standards and the explosive growth of credit default swaps that helped trigger the current economic crisis.  This Council will help prevent regulatory "black holes" and ensure more effective oversight of our financial system.

"I am particularly pleased that this legislation includes an amendment that I authored that would strengthen the capital requirements for large financial institutions. It is critical that large institutions be required to have adequate capital to prevent future taxpayer bailouts and to tackle the ‘too big to fail' problem.  This will strengthen the economic foundation of these firms and help prevent future economic crises.  My provision was strongly endorsed by FDIC Chairman Sheila Bair, who said that my amendment to the financial regulatory reform bill "serves as the most concrete and meaningful legislative proposal" to "improve the quality of capital at U.S. banking organizations.  Contrary to the argument that your amendment would reduce credit availability," Bair wrote in a letter to me, "it will actually encourage renewed lending by placing the banking system on a sounder footing...."

"I am also pleased that at my insistence, the legislation does not burden small businesses that extend credit to their customers like furniture stores, dentists, and auto dealers, with new regulations when they played no role in the excesses and abuses that led to the recession.

"The bill is, however, far from perfect.  It is disappointing that it fails to address the dysfunctional operations of Freddie Mac and Fannie Mae, which were major contributors to the collapse of the nation's housing market.  During consideration of this reform package, I cosponsored an amendment that would have helped protect taxpayers by putting an end to the perpetual governmental bailout of Fannie and Freddie.  Unfortunately, that amendment was rejected, but Congress must tackle the reform of Freddie and Fannie in subsequent legislation.

"On balance, this financial reform legislation will lead to stronger financial institutions, curb the abuses that led to the near collapse of our financial markets, and improve financial oversight.  This legislation will help protect the hard work, the savings, and the dreams of the American people.  Honest savers, borrowers, and investors deserve a regulatory system suited to demands of modern times, where dangerous regulatory gaps are closed, where large institutions are subject to capital requirements, and where risky transactions are identified and controlled before they pose a threat to the economy as a whole."