Systemic Risk Designation Improvement Act of 2016
Floor Speech
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Mr. HECK of Washington. Mr. Speaker, I have a little different take on this. I oppose this bill. In fact, I strongly oppose it, but I don't exactly oppose the idea at all. Let me explain that.
The Dodd-Frank legislation was written, as we all know, during a period of financial crisis, and legislators and regulators had to act quickly. Sometimes, when you have to act quickly, you take shortcuts to get the financial system stabilized. But today, the difference is we have the luxury of time to go back and replace those shortcuts with some more deliberative decisionmaking.
Now, Dodd-Frank said that every bank holding company over $50 billion gets heightened supervision. Well, frankly, back then, for stabilizing a financial crisis, that was a great way to move quickly and to get it done and to bring about the intended result. But again, for making policy over the long term, that doesn't make sense because, in fact, it is an arbitrary-size threshold. So it was a shortcut that made sense at the time, and I join with you in supporting a reevaluation of that particular threshold level.
That is the idea of this bill, and I support the bill--or support the idea. But, again, I don't support this bill at all because, instead of taking the luxury of time to make good policy, frankly, it acts like we are still back in that crisis, and we are taking another shortcut.
The bill says FSOC should determine which banks need heightened supervision, and that is a great idea. That is what they are there for.
And then it says FSOC has to complete all of its work on all of the banks within 12 months. That is a terrible idea. That is a terrible idea.
The last determination that FSOC took lasted 16 months, and they were working on one company at the time--and it took 16 months. And even then, the judge said: You took 16 months, and you acted too rashly and should have deliberated more. But this bill says only 12 months are allowed. And it is not just one company they would be looking at. It could be up to 40 companies with over $50 billion in assets.
So I would say to my friend from Missouri, I think you have a good idea. I wish you would have brought a bill reflecting that idea out here.
Let's remember that Bear Stearns was $400 billion; it contributed.
Washington Mutual, $300 billion; it contributed. All of those banks are going to be in one pot that have 12 months to be looked at. We are, in fact, gutting Dodd-Frank; and, no, I do not agree with my friend from Texas, the chairman, that that is a good idea at all.
The authors kind of recognized this, which is why they said banks get heightened supervision if FSOC says so or if the Financial Stability Board in Basel, Switzerland, says so. I don't know why we would cede sovereignty.
I have been working with the gentleman from Missouri on exactly that issue as it relates to insurance companies. Why are we ceding our sovereignty to some regulatory entity in another country? So I do take a different view of this bill.
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Mr. HECK of Washington. I urge my colleagues to support the idea by rejecting this bill which will not achieve the intended result because it can't work. But the idea can. Go back. Put in a reasonable timeframe. Drop that crazy FSB provision, and let the regulators get to work looking for the risks that devastated the economy a decade ago so we don't have to relive that. If we pass this bill, we very well may.
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