Read the Bills Act Coalition

Thursday, November 19, 2009

Will Senator Mark Warner vote to create a new Frankenstein Federal Agency designed to strangle business recovery?

Will the chummy relationship between Senator
Dodd and Senator Warner create this for the
Business Community of Virginia and the nation??

Posted by MAXIMUS

Senator Dodd's bill is very wide-ranging and makes a number of significant changes to federal law that could adversely affect businesses and business owners; banks and lending institutions, realtors, auto dealers, accountants, insurers, stocks brokers and – importantly – consumers of the products and services of all of these. Does Virginia Senator Mark Warner support Dodd's scheme to strangle future business growth during a time of recession? The two Senators certainly look chummy in the above picture don't they? While there are many significant point of concern in the legislation, there are two that encompass the broadest range of concerns: the creation of a Consumer Financial Protection Agency and what is know as "scheme liability."

Consumer Financial Protection Agency (CFPA)

The legislation creates a central bureaucracy to regulate financial products, with a goal of regulating previously unregulated entities, weed out predatory products and improve disclosures.

While these goals are appropriate, the CFPA will actually harm consumers by making it more difficult for companies to offer financial products or, where products are allowed, make it so expensive as to push even more Americans out of the marketplace.

This powerful new federal agency will have the authority to determine whether or not something is a financial product, and then to regulate it. It will have the authority to ban products and to restrict how they are priced.

One need look no further than legislation that Congress passed this spring "reforming" credit card practices. Credit is much harder to come by and, when available, is much more costly.

If the Dodd legislation passes, we may well see the same thing happen with home loans, auto loans and equity lines of credit.

So, anyone who needs or will need any of these types of loans in the future will be negatively affected by the creation of the CFPA. And, obviously, anyone who provides these products or works for a company that provides these products is affected as well.

Scheme Liability

One sentence in the massive Senate financial regulatory legislation announced last week would leave small businesses, banks and accountants as well as virtually any other business subject to a flood of new securities class action lawsuits. The legislation, sponsored by Senator Chris Dodd (D-CT) and supported by securities class action lawyers, would overturn two Supreme Court decisions and allow those lawyers to sue virtually anyone who did business with a public company alleged to have engaged in fraud even if they didn’t know anything about the alleged fraud.

This guilt by association provision will hurt innocent companies by forcing them into extortionate settlements. Because securities class action lawsuits tend to seek massive damage awards, many bystander businesses—even those bearing no culpability whatsoever—will feel compelled to settle the lawsuits rather than go to trial and risk losing a “bet the company” case.

The legislation is also unnecessary because Congress has already given both the Securities and Exchange Commission and the Department of Justice the authority to civilly and criminally prosecute those who aid and abet violations of securities laws.

This proposed drastic expansion of securities class action lawsuits follows mounting evidence of fraud and corruption in the lawsuits themselves. Two of the most notable plaintiffs’ lawyers, William Lerach and Mel Weiss, were sent to prison after pleading guilty to a criminal conspiracy that involved lying to judges and payment of kickbacks to named plaintiffs and experts.

There have also been news reports in multiple states of securities class action lawyers engaging in pay-to-play with public pension fund officials, contributing large amounts to their campaigns in return for contracts to represent the pension fund in lawsuits in which the lawyers are likely to make tens of millions of dollars in legal fees.

Broader Issues

Aside from specific concerns that certain businesses have because of the direct impact coming from this legislation, it is a given that consumers will be adversely impacted by anything that drives up the cost of doing business.

So, whether is it because of increased legal costs in defending against lawsuits, increased costs of complying with regulations or artificial determinations about the cost of products, these new, increased costs of doing business WILL be passed on to the consumer. And that is everyone.

What can you do to stop the creation of this FRANKENSTEIN AGENCY that will strangle business growth during a time when we need businesses to grow?

The legislation begins markup in the Senate Banking Committee TODAY in an attempt to get it done over the next 2 or 3 weeks. Virginia Senator Mark Warner is a member of the committee and a key to slowing this down and ultimately defeating or significantly changing it.

If you want to support business growth and stop this Frankenstein Federal Agency before it starts walking, letters should go to Senator Warner's Richmond office at 919 East Main Street, Suite 630, Richmond, Virginia 23219 or, preferably, by fax to the same office at 804-775-2319 or call Senator Warner's Richmond office at 804-775-2314 or his Capitol Hill office at 202-224-2023.

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