Financial Institutions Examination Fairness and Reform Act

Floor Speech

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Mr. CLEAVER. Madam Speaker, I yield myself such time as I may consume.

Madam Speaker, I rise in opposition to H.R. 4545.

Today we are considering yet another measure that would weaken our system of financial regulation and bog down regulators in their important work. It would ultimately take us right back to some of the problems that led to the largest financial crisis since the Great Depression. The bill puts financial institutions' profits before the protection of consumers and the best interests of the American public.

I rise, Madam Speaker, to say to Members of both sides of the aisle that we must remember the past as we create policies. I was here during that entire period, and it created a very, very heavy darkness over this entire country.

In the years preceding the financial crisis, the Federal Reserve failed to write rules stopping predatory, risky mortgage loans. The OCC and OTS preempted State regulators from reining in mortgage abuses. The Federal Reserve Bank of New York and other regulators failed to stem excesses at large companies and did not downgrade troubled companies until it was too late. Legislation such as H.R. 4545 sets the stage to return us to an ineffective regulatory system.

Republicans have made it a habit to falsely claim that their legislation is designed to benefit small community banks and credit unions. There are some things that could be changed to improve Dodd- Frank and to provide responsible relief for small community institutions, which I believe we all recognize did not cause the financial crisis.

I have said in our committee and I will say openly in any other place, including on the floor here, that there are some things we can repair in Dodd-Frank. But what this bill would do is give all regulated financial institutions an additional way to appeal and, thereby, postpone material supervisory determinations of their prudential regulator and of the Consumer Financial Protection Bureau.

In other words, messy megabanks and other big financial firms could appeal and delay adverse determinations such as a downgrade of a bank's credit rating for capital asset quality management, earnings, liquidity, and sensitivity to the market risk. It would also enable them to appeal significant deficiencies of their anti-money laundering programs, findings related to the violations of various rules, or a downgrade of their Community Reinvestment Act ratings.

Let's think about this for just a minute. Some banks would be allowed, under this bill, to appeal the OCC's historic and well- deserved double downgrade of its CR rating. Under this bill, Wells Fargo, for example, would be allowed to unleash its army of lawyers to not only fight against the rating, but to tie the OCC up in proceedings. We all know that when the banks who spend millions on legal teams each year deploy those resources, they deploy them to win; and if they win, then American consumers lose.

But let's focus on CRA. CRA was intended to ensure that institutions were making loans and providing services in the lower-income and moderate-income neighborhoods in which they were located to address the problems of redlining.

As highlighted in the recent report by the Center for Investigative Reporting, redlining is not just some relic of the past. Sadly, painfully, and embarrassingly, redlining appears to be still very much an ongoing, troubling problem that continues to harm many minority mortgage loan borrowers in cities all across the United States of America.

This bill will make redlining worse, and that will happen because, instead of improving their ratings and trying to end discriminatory lending practices, bank executives will simply challenge these rates and bully their own regulators into submission.

Now, this may be unintentional, as I would presume to believe, but this bill ignores the fact that prudential regulators and the Consumer Bureau each already have an agency ombudsman and an intra-agency formal review and appeals process. What's more, messy megabanks already have existing avenues to bring a court challenge to any form of regulatory enforcement act.

Thus, what this bill would actually do is create unprecedented barriers to the effective, prudential, and consumer protection supervision of the messy megabanks. It will give messy megabanks and predatory lenders, including payday lenders, an additional way to resist corrective actions to avoid violations of law or safety and soundness risk. As a result, the bill would allow these financial institutions to bog down agencies with frivolous appeals.

In a letter opposing H.R. 4545, the National Consumer Law Center wrote that the effective bill ``would be most pronounced at the largest banks who could appeal dozens or hundreds of material findings from every examination creating enormous roadblocks to supervision. The bank supervision process has been the first line of regulatory defense against threats to bank safety and soundness for a century or more. H.R. 4545 creates unprecedented roadblocks to the effectiveness of bank supervisory determinations and could be devastating to effective regulatory oversight in areas ranging from basic prudential oversight to key consumer protections that make our financial markets fairer.''

In addition, the nonpartisan Congressional Budget Office found that H.R. 4545 would increase the deficit by hundreds of millions of dollars--by hundreds of millions of dollars. It would increase by hundreds of millions of dollars. Hundreds of millions of dollars it would increase. Millions of dollars would be increased because banks would be more likely to fail and need government assistance.

In sum, H.R. 4545 would weaken our Nation's system of financial regulation, and, in so doing, it would recklessly set the stage for a return to the captive, hamstrung regulatory system that existed in the years before the 2008 financial crisis that enabled the risky profit- fueled activities of large, complex, messy megabanks and other titans on Wall Street to go unchecked. I therefore urge my colleagues to oppose H.R. 4545.

Mr. Speaker, the inimitable chair of our committee is absolutely right: there are Democrats. This is a bipartisan piece of legislation. But it proves what I was trying to say earlier, and that is that I and many other people believe that we need to make some changes to Dodd- Frank. This is just not one of them.

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Mr. CLEAVER. Maxine Waters), and I ask unanimous consent that control she may control that time.

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