Regulation, transparency key to reforms

If you find the ongoing debate over financial reform legislation confusing, you're not alone. The financial industry that made a fortune by recklessly and unethically gambling with other people's money has spent hundreds of millions of dollars and hired an army of lobbyists to muddy the waters in order to make proposed reforms difficult to understand and enact.

Despite the complexity of the issue, the efforts of some to protect the status quo, and the influence of financial institutions over our political process, now is the time to act to protect the American taxpayer. We have seen the cost of lax regulation and inaction already, and it's a cost that we can't afford to pay again.

After speaking at length with market experts for varied perspectives, I am convinced these are common sense changes that would make the banks more transparent and accountable:

• End "too big to fail" and taxpayer-funded bailouts. We can't afford to be left holding the bag for behemoths, be they banks or housing lenders, that cannot be responsibly dismantled if things fall apart. Congress must create regulations to safely "wind down" institutions that pose a systemic risk to the economy. If financial institutions fail, the result should be CEOs losing jobs, not national spikes in unemployment and lost worker pensions.

• Increase market transparency. All financial derivatives must be traded on open exchanges. Derivatives can be valuable tools to help companies, individuals or even countries protect themselves from short-term price shocks. For example, an airline could use derivatives to help ensure they are not affected too negatively if the price of gasoline increases. The problem is that many of these complicated instruments are constructed and traded by financial institutions behind closed doors. They stopped being a smart way to insure against price shocks and became instruments to recklessly speculate on those prices, and then sell the risk to people and institutions who barely understood what they were buying. If derivatives are put on transparent exchanges, this could bring huge increases in trading volume to Chicago.

• Protect consumers. The proposed Consumer Financial Protection Agency would create disclosure standards and work to stop predatory lending. Big banks have millions of dollars, armies of lobbyists, and even some politicians working on their behalf. It only makes sense that we have someone working on ours.

It's easy for politicians to say they are against taxpayer-funded bailouts, that they want to "work across the aisle" and pledge to put Main Street before Wall Street. The problem is that many politicians are beholden to the same financial industry that they are supposed to regulate on our behalf. Talk is cheap, and taking action to support real reform can be costly for those who have come to rely on contributions from the big banks to get re-elected.

Politicians too often exaggerate the smallest point of opposition to a long and complicated bill as an excuse to kill legislation instead of contributing to it. Americans recognize that the problems we face are complex, and they expect leaders to address them with substantive reforms, not oversimplified rhetoric. I urge our members of Congress to support this much-needed reform, and I plan on protecting taxpayers from corporate bailouts and public debt after I'm elected.

• Scott Harper is the Democratic candidate in Illinois' 13th Congressional District.