Emergency Economic Stabilization Act of 2008

Floor Speech

EMERGENCY ECONOMIC STABILIZATION ACT OF 2008 -- (House of Representatives - September 29, 2008)

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Mr. COSTA. Madam Speaker, to the chairman of the Financial Services Committee, it is my understanding that section 132 of the bill authorizes the Securities and Exchange Commission to suspend by rule, regulation or order, statement 157 of FASB if the commission determines it is necessary and appropriate and in the public interest and that this discretionary authority would grant banks flexibility in meeting their accounting requirements; is this correct?

Mr. FRANK of Massachusetts. Yes, this reaffirms existing law, but we did it explicitly to underline its importance. There is very legitimate concern in this body on both sides of the aisle for the community banks. They are, in many cases, victims of practices from which they, themselves, abstained.

There is language in here that tries to give them some relief that they would get from the preferred tax situation with Fannie Mae and Freddie Mac. Other Members have raised the question of increasing the FDIC insurance limit next year, and this one in particular on the accounting, obviously none of us want the legislative accounting. But the gentleman has raised a very important point, and yes, we agree absolutely with how he has framed it.

Mr. COSTA. And I understand, Mr. Chairman, the section does not require the SEC to grant such discretion. Is it the intent of the gentleman and the chairman of the SEC to ensure that banks are granted accounting discretion, to the extent that such discretion is consistent with the intent of the language in section 132, including but not limited to in reports that will be required at the end of this month?

Mr. FRANK of Massachusetts. The gentleman is again correct. It does not require it, but we would clearly hope that they would look at this very seriously.

Mr. COSTA. And the legislation doesn't speak to it, but it is my understanding that the chairman of the committee will work on all regulatory agencies, including the banking regulatory agencies, to ensure that banks have the necessary and appropriate flexibility to address the changing market environment regarding capital requirements, accounting, audits and reports, and to do so in a timely manner for reports as of September 30, the end of the next reporting period, and would include but not be limited to the section 132 discretion?

Mr. FRANK of Massachusetts. Yes. There are two separate things here. One is the mark to market accounting due to the consequences that follow that.

The SPEAKER pro tempore. The gentleman's time has expired.

Mr. FRANK of Massachusetts. I yield an additional 30 seconds.

One thing we talk about as you study what the appropriate accounting ought to be, not legislative but as they study it, there is room for flexibility in how quickly various consequences attach to that, and we are discussing that with the regulators.

Mr. COSTA. Finally, Mr. Chairman, I would like to commend you and the staff for the hard work that has been done on assimilating this very important package.

While it is unfortunate that we are in this position here today, the economic security of our Nation is at risk. We are talking about Main Street here. To do nothing is not an option. I look forward to supporting this effort and your efforts in the next Congress to do the reforms that are necessary to bring back economic sanity to our country. I would urge an ``aye'' vote.

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