Systemic Risk Designation Improvement Act of 2016

Floor Speech

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Mr. AL GREEN of Texas. Mr. Speaker, I think it appropriate to reflect for just a moment on what the crisis was like in 2008.

In 2008, when this crisis hit and it started to blossom, started to blow up, banks would not lend to each other. The crisis was so serious that banks would not bail each other out.

We had a circumstance such that people were losing their homes. They were losing their homes because of these so-called exotic products that allowed them to buy homes that they could not afford, homes that would allow them to have a teaser rate that would coincide with a prepayment penalty such that they couldn't get out of the rate that was to follow, which was going to be higher than they can afford.

Mr. Speaker, this bill, H.R. 6392, should be appropriately named the ``Systemic Risk Creation Act,'' because that is what it does. It creates the opportunity for systemic risk to exist, and it puts us back where we were before Dodd-Frank such that these various banks and lending institutions and other institutions of great amount of finance would be in a position to fail without our having the opportunity to immediately act upon them, as was the case with AIG. There was no system in place to deal with the AIGs of the world.

Dodd-Frank allows us to do this in a systemic way, a systematic way, an orderly way. It allows us to, if we need to, wind down these huge institutions-- wind them down such that they don't create harm to the broader economy.

I want you to know, Mr. Speaker, for those who think that these are all small banks, let me just give you some indication as to how small they are. I am looking now at the top five of the 27 in question. The top five:

Number five is $217 billion.
Number four, $255 billion.
Number three, $278 billion.
Number two, $350 billion.
Number one, $433 billion.

Only in the Congress of the United States of America would this be considered small change.
We must not allow this deregulation to take place such that we put the economic order at risk again. This bill, Dodd-Frank, when it passed, allowed us to look at the entire economic order and to determine whether or not there were institutions that were a systemic risk to the economic order. Prior to Dodd-Frank, they were all siloed.

Prior to Dodd-Frank, we had long-term capital. Long-term capital was the first canary in the coal mine.

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Mr. AL GREEN of Texas. Long-term capital had its demise in 1998. It was a canary in the coal mine. Bear Stearns followed, as well as IndyMac, Countrywide, and WaMu. They followed in 2008.

We didn't have a system that allowed us to recognize these canaries in the coal mine and take affirmative action. This is what Dodd-Frank does. This is what FSOC does. And it would be a severe mistake to vote for legislation to repeal these bills. We are going to live to regret this vote. Those who vote to repeal will live to regret it.

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Mr. AL GREEN of Texas. Madam Speaker, let's take a look at this size question because $50 billion was selected for a reason, and the reason is this: If you don't have a threshold, we knew at the time, as we know now, that you won't get any banks designated because the banks are going to sue, and they are going to tie you up in court. Well, maybe some will not, but you are going to have a real fight on your hands getting them to be designated, and it can take 2 to 4 years to get it done.

Looking at the banks that are covered, only three of the banks covered are in the $50-billion range. The top 15 are over $100 billion, and the top bank is about a half trillion dollars. Again, only in Washington, D.C., would this kind of money--a half trillion dollars for one bank--be considered small change.

We cannot allow the banks to dominate the process. We put the process in the hands of the banks when the regulators have to take them on one at a time.

Finally, what is wrong with telling a bank, ``You have to tell us how to eliminate you if you become a systemic risk''? That is what Dodd- Frank does. This bill eliminates the ability of FSOC to determine and tell banks that they must give up.

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