Restoring American Financial Stability Act of 2010

Floor Speech

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Ms. COLLINS. Mr. President, I am calling up tonight the amendment I debated on the Senate floor on Monday, with Senator Dodd and other Members who were present. This amendment would direct regulators to impose strong risk- and size-based capital standards on financial institutions as they grow in size or engage in risky practices. I am pleased to offer this amendment on behalf of myself, Senator Shaheen, and Senator Brownback.

Our amendment is aimed at addressing the too-big-to-fail problem at the root of the current economic crisis by requiring financial firms to have adequate amounts of cash and other liquid assets to survive financial challenges without turning to the taxpayers for a bailout.

I note this amendment would ensure that the Nation's largest banks and bank holding companies are required to meet, at a minimum, the same capital standards that are imposed on smaller community banks.

That is right. It may be odd to realize, but the fact is, under current law, regulators can allow larger financial institutions to follow capital standards that are actually less stringent than those that are applied to smaller depository institutions. That makes no sense whatsoever, and that is why this amendment has the strong support of the Chairman of the Federal Deposit Insurance Corporation, the FDIC Chairman, Sheila Bair.

She has written me a letter endorsing this amendment. She points out it is a critical element to ensure that U.S. financial institutions hold sufficient capital to absorb losses during future periods of financial stress. ``It is imperative,'' she writes, ``that they have sufficient capital to stand on their own in times of adversity.''

This amendment would apply to some of our largest banks as well as bank holding companies, and it would also apply to nonbank financial institutions that are identified for supervision by the Federal Reserve by the new Financial Stability Oversight Council, established by the bill.

This council is the council of regulators that will be created so we have an entity that would look across the economy to identify financial institutions and practices, risky practices that could pose a systemic risk to our economy.

Since I did debate the amendment at length on Monday, I am not going to go on at length tonight, especially since there are others of my colleagues who are waiting to speak. I would note that I have had a very good discussion with the managers of the bill, and I look forward to working further with them in the hopes that we can schedule this amendment for a vote tomorrow. I note this is a bipartisan amendment and that we have consulted at length with the chairman of the Banking Committee.

With that, I ask unanimous consent that the letter from the Chairman of the FDIC be printed in the Record, which letter further describes the amendment and the need for it, and I yield the floor.

There being no objection, the material was ordered to be printed in the RECORD,

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