Economic Growth, Regulatory Relief, and Consumer Protection Act--Motion to Proceed

Floor Speech

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Mr. MERKLEY. Mr. President, the first three words of our Constitution are, ``We the People.'' This is the mission statement of the United States of America. Our government was set up not to create a government by and for the powerful and the privileged but by and for the people of the United States and, as Jefferson put it, the government would reflect the will of the people. It is quite a different concept from many of the European governments that operated directly for the benefit of the best-off or the wealthy and well connected.

We have seen a corruption of the American Constitution. We have seen it turned on its head, with government implemented by and for the rich and powerful, time after time over this last year.

What did we see in 2017? We saw much of the year spent destroying healthcare for 22 million to 30 million Americans and increasing the cost of healthcare for everyone else--certainly not reflecting the will of the people--and then we saw a tax bill taking $1.5 trillion from our children and our grandchildren and giving it to the richest of Americans, the largest bank heist in world history.

Well, now we have another assault on ``we the people'' government. S. 2155 undoes a lot of the work to create a financial system for America to thrive, for families to thrive, and restores the lack of regulation and high-leveraged bets that brought the economy down in 2007 and 2008.

When the economy came down, the wealthy and well-off did quite well. They picked up properties at pennies on the dollar, but who was hurt? The American people were hurt. The American workers were hurt. They lost their jobs. They lost their retirements. Certainly, they lost so much in terms of the financial foundation for their families. Yet here we are again. We seem to have forgotten that when you let the big banks rampage through our economy, you are setting the stage for another big mess--high-risk gambling on Wall Street, destroying Americans' financial lives, lost homes, lost jobs, and lost retirement savings.

When we passed Dodd-Frank, the principle was, never again will we let the Wall Street casino crash our economy. Well, ``never'' hasn't lasted very long.

In the bill before us, section 203 exempts financial institutions-- smaller banks with assets under $10 billion--from the Volcker rule. What was the Volcker rule? The Volcker rule was a firewall that said: Take deposits to make loans but don't engage in high-risk, high- leverage bets on the future price of stocks or the future price of currencies. Those are called derivatives, those bets on those future prices. Those are appropriate in a hedge fund. If somebody wants to compile money for millionaires and billionaires and make bets on the future prices, then go ahead and gamble in your hedge fund, but don't do it in our banks.

So now we have this bill that says: Well, let's open the door to reestablishing the Wall Street casino but just not on Wall Street; let's do it on our small banks. Well, what was bad and risky for big banks is bad for small banks. Should they put their money into loans to help the rural economy thrive or should they make big bets on future prices casino-style? This bill opens up small banks to being casinos. It is the wrong way to go.

Then there is section 401 on capital requirements. It takes enormously large banks up to $250 billion in size and repeals the requirement for living wills. It repeals the requirement for annual stress tests to make sure the capital is truly being set aside and the bank is being operated in an appropriate fashion for a depository institution.

Former Deputy Treasury Secretary and Federal Reserve Governor Sarah Bloom Raskin said granting the Fed control for the stress test, rather than having them annually, is ``legislative fool's gold.'' That is the expert talking about the foolishness of eliminating stress tests.

In addition, it lowers capital standards. So often I have heard folks come to this floor saying, ``We don't need so much regulation. Let's just increase the capital standards,'' but this bill does the opposite. It impacts 25 of the 38 largest U.S. banks, which together hold $3.5 trillion in assets. This is clearly a situation that creates enormous risks for our economy. Who will pay the price? Working America will pay the price. Build the bubble, burst the bubble, and the boom goes down on middle-class America.

Then there is section 402. Section 402 is related to globally systemically important banks. They are referred to by the initials GSIBs--globally systemically important banks. Then there are custodial banks. Those banks received $5 billion in Federal bailout money during the financial crisis. They want to escape the supplemental leverage ratio that was designed to decrease the risk. Each megabank has to have enough tier 1 capital to satisfy an SLR--a supplemental leverage ratio--but custody banks want relief so they don't have to hold as much common stock--common stock, which is tier 1 capital, but shoehorned into this are Citi and JPMorgan. CBO says the following: ``There is a 50% chance that regulators would allow two other financial institutions--JPMorgan and Citibank, with combined assets of $4.4 trillion--to adjust their SLRs under the terms in this bill.'' In other words, higher leverage ratios, lower capital, exactly the kinds of things that imperiled our economy previously, and yet that is right in the heart of this bill.

What about consumer protection? Let's turn to section 107, which grants exemption from key mortgage lending protections for the buyers of manufactured homes. Manufactured homes are put on a foundation and sold as regular homes. Then you have modular homes. This provision expands it to modular homes. It would reduce consumer protections of the part of the market that disproportionately serves low- and very low-income Americans and rural America. Do we really want to strip the consumer protections for lower income Americans and rural Americans when buying a home? No, we don't, which is why this provision should not be in this bill. It is why this provision is a bad idea.

One more section of the bill; that is, HMDA reporting--Home Mortgage Disclosure Act reporting.

The Consumer Financial Protection Bureau required expanded data reporting because it allows you to see where the rules might be being broken on predatory lending. It allows you to see where there might be an engagement in discriminatory lending. But this bill says that we are not going to get that data anymore. We are not going to get the data that would help us identify illegal redlining, for example, and that this exemption would apply to 85 percent of the reporting institutions that are covered by the Home Mortgage Disclosure Act.

Most of this information is data that is already collected. Reporting it provides an understanding about redlining, about discrimination, about discriminatory practices. If you don't have the information, those things get hidden. That is damaging to America's families.

That is quite a list of things that are wrong with this bill. This bill has been presented as remedies for small banks, but, as my colleagues just noticed from these items, what we see are the ripping aside of consumer protections and a whole lot that is being demanded by the big banks that want less capital and higher leverage.

Let's do a bill for smaller banks. Let's understand that more flexibility is appropriate in rural areas. Let's observe that more flexibility in the types of mortgages might be appropriate in small banks in small communities where those loans are portfolioed. Democrats came forward with a whole list of these things to help small banks, but what do we have from our Republican leadership? A bill designed for Wall Street. A bill designed for Wall Street, for the wealthy and the well-connected. It is not designed to help ordinary Americans.

Ordinary Americans are plagued by the challenges of discrimination, and this makes it worse; or redlining, and this makes it worse; or predatory practices, and this makes it worse. They are also plagued by high-interest payday loans. What does this bill do to take on the 500- percent interest rates that every society across the globe has recognized are incredibly destructive, sucking people into a vortex of debt and destroying families? This body right here said that they are so destructive, we cannot allow these high-interest loans to be given to our servicemembers because they destroy our service families. Shouldn't we stand up for all of our families in America? If something is so predatory and so destructive to our service families that we say it is illegal, shouldn't we make those same loans illegal for everybody?

Do you see anything in this bill related to ``we the people''? Very little. The ``we the people'' bill the Democrats put forward was rejected, and what we have is this Wall Street bill for lower capital, more leverage, more predatory practices. That is just not right.

I hold a lot of townhalls. I hold 36 townhalls a year, 32 of them in very red counties. Not one person in over 300 townhalls has come up to me and said: Get rid of the regulations on Wall Street because we want them to be able to do more low-capital, high-leverage bets and put our economy at risk. Nobody in America advocates building another bubble on high-risk leverage.

So what are we doing with this bill? What we are doing is making a mistake. We should defeat this assault on the effort to have a financial system in America that is designed to serve the mission of the United States, the ``we the people'' mission of the United States of America.

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