October 22, 2009
Assistant Secretary Michael S. Barr
House Judiciary Committee Subcommittee
on Commercial and Administrative Law
Thank you Chairman Conyers, Chairman Cohen, Ranking Member Smith, and
Ranking Member Franks. I appreciate the opportunity to testify today.
The topic before the committee today is central to the task of reform. Just over a
year ago, the collapses of Washington Mutual, Wachovia, and Lehman Brothers,
and the extraordinary interventions in AIG, severely tested our collective ability to
respond to the financial crisis. In the panic that followed, our financial system
nearly ground to a halt.
A swift response prevented a truly catastrophic collapse. But last September's
events revealed deep weaknesses in our financial system.
It did not take long for the financial contagion to infect the real economy. When
President Obama took office, America's growth rate had hit negative 6.3 percent,
and monthly job losses had reached 741,000 - the worst in decades.
There are indications that we have moved back from the financial brink and are
headed toward economic recovery. Important parts of the financial system are
back to functioning on their own. Some of the damage to people's savings has
been repaired. We have taken the first steps towards both reducing the
government's direct involvement in the financial system and reducing the risks that
taxpayers are bearing.
But we cannot ignore the urgent need for action: our regulatory system is outdated
and ineffective, and the weaknesses that contributed to the financial crisis persist.
Our citizens are paying the price everyday for the failures in our financial system.
The progress of recovery must not distract us from the project of reform.
The Administration has put forward comprehensive reforms and we are working
closely with Congress to enact legislation by the end of this year.
Our goals are simple: to give responsible consumers and investors the basic
protections they deserv