Taking Account of Institutions with Low Operation Risk Act of 2017
Floor Speech
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Mr. Speaker, I rise in opposition to H.R. 1116, the so-called Taking Account of Institutions with Low Operation Risk Act of 2017, or the TAILOR Act.
This bill would weaken important safeguards established since the financial crisis by requiring agencies on the Federal Financial Institutions Examination Council--composed of the Federal Reserve Board, Federal Deposit Insurance Corporation, National Credit Union Administration, Consumer Financial Protection Bureau, and Office of the Comptroller of the Currency--to perform a biased analysis that favors lessening the costs for industry over protecting consumers and the economy.
It was 10 years ago today that Bear Stearns collapsed and the Federal Reserve used taxpayer funding to arrange a shotgun wedding to J.P. Morgan to avoid a catastrophe. We now know that much, much worse was to come, when AIG, Lehman Brothers, the money market fund industry, and hundreds of banks, including all of the largest ones, would need a bailout. And this says nothing of the tremendous damage inflicted on the millions of Americans whose homes were lost to foreclosure, the millions who lost their jobs, and the trillions of dollars of wealth that evaporated.
Congress took decisive action to ensure that we were never caught unaware again when it passed the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Although some claim that the measure that is now before us is aimed at helping community banks, that is not the case. If enacted, this bill would provide all financial institutions, including the largest banks, with opportunities to challenge any and every regulation in court if they felt it was not, so-called, uniquely tailored to their business needs.
This bill would ignore the mandates and requirements of all other laws passed by Congress and override decades of well-established administrative law requirements by subjecting all new financial rules to a vague, if not impossible, standard to meet. This includes an undefined standard of appropriateness and a vague standard of the ability to serve evolving and diverse customer needs; and, importantly, the legislation includes no similar mandate that regulators consider the benefits of Federal regulations, including the promotion of our
Nation's financial stability or the protection of our consumers.
Let us not forget that the Consumer Financial Protection Bureau is the centerpiece of this Dodd-Frank reform. Prior to Dodd-Frank, our consumers had nobody looking out for them. They were left and they were taken advantage of, and so that is why we have Dodd-Frank reform.
But it seems that my friends on the opposite side of the aisle have forgotten about all of this. This set of standards that they are promoting not only applies to all future guidance and rulemaking, but retroactively to all of the rulemakings in the past 7 years, which, conveniently for the industry, covers all rules under the Dodd-Frank Act.
But financial regulators already have to go through extensive look-back reviews to refine and improve rules that make sense. In fact, under the Economic Growth and Regulatory Paperwork Reduction Act, or EGRPRA, which my colleagues on the other side of the aisle were just last week calling the gold standard for how regulators should review regulations, the Federal Reserve, OCC, and FDIC are already required to review their rules once every 10 years.
During this review, the regulators must identify whether regulations are outdated, unnecessary, or unduly burdensome and consider how to reduce regulatory burdens on insured depository institutions while, at
the same time, ensuring safety and soundness.
The Consumer Bureau engages in a similar look-back review 5 years after a significant rule takes effect.
Make no mistake: I support tiered and tailored regulations for community banks and credit unions, but week after week, we have been on this House floor debating deregulatory gifts to Wall Street instead of moving legislation that actually benefits community banks and credit unions.
I know my colleagues on the other side of the aisle and I have differences about Dodd-Frank, but something we worked hard to do in crafting those critical reforms was to make sure that the law did not impose a one-size-fits-all approach on every financial institution. So, as you can see, the toughest rules focus on the largest and most complex financial firms that, as we saw in the crisis, can destabilize the financial system and inflict lasting damage to the economy and constituents we serve.
We have monitored Dodd-Frank's implementation carefully and pushed regulators to tailor rules to reduce unnecessary compliance burdens while maintaining appropriate protections and safeguards for consumers, investors, and taxpayers.
We must continue to take this type of targeted approach instead of advancing measures like H.R. 1116, this bill that we are talking about right now, which would force the regulators to prioritize costs to Wall Street over benefits to consumers and the economy and expose rulemaking to needless litigation because of the nebulous standards in the bill.
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Mr. Speaker, I am always amazed at the deregulatory bills that are produced by the opposite side of the aisle, and I keep wondering why there are so many attempts to provide the banks and the financial institutions, the largest banks in this country, opportunities to make even more money.
According to an estimate from Goldman Sachs, the Republicans' tax scam bill represents a giant windfall for Wall Street megabanks. So we are here with another bill to deregulate, basically to talk about tailoring. Let me just redefine this tailoring. It just means changing, modifying, coming up with ways that the banks can basically complain about their costs and their burdens. But my friends continue to basically support them in whatever efforts they want in order to make more money.
This report that I just referred to estimates that all of the largest banks, eight of the largest banks, will receive $15 billion windfalls on their 2018 tax bill. This includes $3.7 billion for Wells Fargo, $3.5 billion for Bank of America, $3.3 billion for JPMorgan, $1.4 billion for Citigroup, and $1 billion for Goldman Sachs.
What more do they want? How much more can you give them? What is the next deregulatory bill that you will come with on this floor?
It is interesting to note that the Financial Services Committee is responsible for over 50 percent, or at least 50 percent, of all of the bills coming through the Rules Committee that come to the floor, which means that my friends on the opposite side of the aisle have spent an inordinate amount of time coming up with legislation dealing with deregulation of these big banks.
Now, we have a lot of things that we could be doing to protect consumers, working people, and families in that committee. I wish we would spend a lot more time on HUD. The homeless population in this country is expanding. It is exploding all over the country. In New York and California, in the Midwest--you name it--people are on the streets.
Do you think we have been able to have a hearing on homelessness in this committee? No, because all of this time is spent on supporting the biggest banks in America and deregulating in ways that will cause them to be able to make more and more money.
How much more do they want? How much more do they need? How much time is this Congress going to spend on trying to undo Dodd-Frank and kill the Consumer Financial Protection Bureau?
I don't know the answers to these questions, Mr. Speaker. And I wish they would answer me, but no, I know they are not going to. They are simply going to come and talk about tailoring. Well, tailoring just means changing, fixing in a way that will benefit the biggest banks.
Mr. Speaker, I will let them continue with their deregulatory efforts.
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Mr. Speaker, I am perplexed and somewhat amused by the statement that the community banks are just withering on the vine.
Well, let me just talk about what is happening in the banking community. Dodd-Frank is not hampering the banking sector at all. In 2016, the industry made record profits of $171 billion, and community banks are outperforming their larger peers. At the end of 2016, lending was up 8.3 percent for community banks and 4.8 percent for larger banks. Credit unions are expanding, and they have increased their membership by more than 16 million since 2010, an increase of 18 percent.
We oftentimes talk about what we are doing to the community banks. But we always--you, rather, always have a way of making sure that big banks are attached to this deregulation that you say you want to do for
community banks. All you have to do is amend this bill and make it apply only to community banks.
Would the gentleman who is talking about what the ranking member should understand and should be thinking about be willing to amend the bill so that it only applies to community banks?
That is rhetorical, and I won't ask for an answer.
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Mr. Speaker, I was just reviewing this bill somewhat and it has come to my attention that this so-called tailoring, which really means modifying, changing, doing something different, is for each individual bank.
So each individual bank could say: We do things this way, so we want a rule that is tailored especially for us.
Another bank could say: We do things another way, and we want some separate rules just for us.
And on and on for every bank.
Is this what this is all about? Is this what this so-called tailoring is about? This tailoring, which is modifying, changing, basically deregulating in the interest of the big banks to make sure they can reduce their costs and get rid of what they would call their burdens?
Are you really talking about having our regulators look at each bank and say: You do business a little bit different, so we are going to change the rules just to fit your bank?
Well, Mr. Speaker, it doesn't seem to me as if this is plausible. This does not make good sense. I don't understand why my friends on the opposite side of the aisle, in their deregulatory efforts, would even try this one. This one doesn't work.
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Mr. Speaker, I am very pleased that my colleague on the opposite side of the aisle, Congressman Lucas, enjoys engaging in these discussions also. I watched very closely his countenance, and I see that he is
enjoining it even more than I ever dreamed he would. So let us continue with this very lively debate where we can at least lift the spirits of each other as we go through our daily work.
Having said that, the chairman likes to say that we lose a community bank a day. However, last year, only eight banks failed.
The other 230 banks merged with others, and I would like the chairman to even acknowledge that long before Dodd-Frank, we were losing a bank a day, and that trend had been going on for 30 years. So I do not wish us to think that something new and extraordinary is happening, that somehow we have come to a point in time in the banking world where banks are being lost on a daily basis in a way that they have not been lost before.
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Mr. Speaker, I keep hearing my colleagues talk about one size does not fit all and they keep trying to make a case for the community banks, but they always tie the community banks to these deregulatory efforts so that the big banks can benefit from it.
When I take a look at the Dodd-Frank requirements and how they target the largest banks, let's take a look at those banks that are less than $10 billion in assets. They don't have to comply with all of these regulations.
If they are a little bit bigger, they are between $10 billion and $50 billion, they have to comply with just a few more, but not as many as the large banks. If they are $50 billion to $250 billion, yes, we have a few more requirements for them. And then the big boys, the big banks, yes, we have more oversight and more requirements.
Do you know why? Because they put this entire economy at risk if they fail.
When we talk about doing all of the stress-testing, we are stress-testing on these banks because we know that, in the event of an economic downfall, if they don't have the capital, if they don't have the kinds of things that would keep them safe, they could trigger another recession.
So stop saying that one size does not fit all and trying to make people believe that somehow we are requiring the same thing of the small community bank as we are requiring of the big bank. It is absolutely not true.
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Mr. Speaker, Members, and to my colleagues on the opposite side of the aisle, I am going to take a couple of minutes to bore you. I am going to bore you with all of the groups who are opposed to your legislation.
I heard one of your Members say that you have tremendous support. I didn't hear where that support is coming from, but I do believe that probably the biggest banks in America are supporting your legislation. So please allow me to share with you who is opposing your legislation.
Allied Progress; the American Federation of State, County and Municipal Employees; Americans for Financial Reform; the Arkansans Against Abusive Payday Lending; Center for American Progress; Center for Economic Integrity; Center for Justice and Democracy; Center for Responsible Lending; Consumer Action; Consumer Federation of America; Consumers for Auto Reliability and Safety; Consumers Union; Demos; the Florida Alliance for Consumer Protection; Indivisible; Interfaith Center on Corporate Responsibility; Jacksonville Area Legal Aid Incorporated; the Kentucky Equal Justice Center; the NAACP; the National Association of Consumer Advocates; the National Association of Consumer Bankruptcy Attorneys; the National Center for Law and Economic Justice; the National Coalition for the Homeless; the National Consumer Law Center, on behalf of its low-income clients; the National Consumers League; the National Fair Housing Alliance; the National Urban League; the People's Action Institute; PolicyLink; Progressive Congress Action Fund; Prosperity Now; Public Citizen; Public Justice Center; Reinvestment Partners; Statewide Poverty Action Network; Tennessee
Citizen Action; U.S. PIRG; West Virginia Center on Budget and Policy; the Woodstock Institute; and the World Privacy Forum.
If you have time, I would like you to share with me who is supporting your legislation.
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Mr. Speaker, the majority is continuing to move to roll back important financial regulations at a furious pace. Week after week, the majority pushes harmful bills through the House. This bill is just the latest example.
In recent months, this deregulatory frenzy has included House passage of bills that, among other things, allow payday lenders to evade State interest cap rates, decrease operational risk capital requirements and roll back enhanced prudential standards for the Nation's largest banks, weaken consumer protections for mortgages, undermine efforts to combat discriminatory and predatory lending, reduce consumer privacy protections, and threaten the stability of our financial system and economy.
Last week, Republicans pushed through H.R. 4607, another bill that is designed to weaken rules considered inconvenient by the financial services industry, despite the harm that could result for consumers and the economy.
As we have discussed, the bill we are debating today, H.R. 1116, would allow large financial institutions to challenge financial regulations in court if they believe them not to be uniquely tailored to their business needs. It includes a provision that would allow these challenges for all of the financial regulations put in place following the financial crisis, making all of the important Dodd-Frank reforms targets.
Of course, the legislation is totally silent on the need for regulators to consider the interest of consumers and to ensure the stability of our economy as they conduct rulemakings.
Ultimately, this bill would serve to put consumers and the financial system at risk by subjecting important regulations to endless litigation. It is designed to block and bog down important rules that were put in place following the financial crisis to protect consumers, investors, and our economy.
I would simply urge Members to oppose H.R. 1116, and I yield back the balance of my time.
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