Financial Services and General Government Appropriations Act, 2015

Floor Speech

BREAK IN TRANSCRIPT

Ms. WATERS. Mr. Chairman, I rise today to offer an amendment that will address provisions within this legislation that threaten the independent funding of the Consumer Financial Protection Bureau, an agency that has been remarkably successful in standing up for consumers and taxpayers who have been subject to the deceptive practices of bad actors in our financial system.

To those who have ever fallen victim to a payday or predatory loan, to those who have had a dispute with a credit card company over excessive late fees or interest rates, to those who have had issues with a bank account, mortgage loan, or even a credit score, the Consumer Financial Protection Bureau is your watchdog. It is your advocate. It is your cop on the beat. And, thus far, your advocate has done an outstanding job. To date, 12.6 million consumers have received more than $3.8 billion in direct refunds because of the CFPB's enforcement actions.

In large part, the CFPB is able to accomplish these tasks because of its political independence. It is able to prosecute bad actors without regard for the political blow-back. This is directly due to the CFPB's independent funding stream. But, Mr. Chairman, this legislation would end the Bureau's independence by tying its funding to the highly political congressional appropriations process.

The result will be a weakened CFPB, one unable to properly advocate on behalf of our Nation's consumers. And if enacted into law, we would be one step closer to the Republican goal of ending the CFPB altogether--and its work on behalf of our students, seniors, families, and servicemembers.

Mr. Chairman, my amendment would end this reckless attempt to politicize
consumer protection by removing this provision and replacing it with language that allows the Bureau to maintain its independent funding.

Unfortunately, the rules of the House make it impossible to restore CFPB's current funding mechanism. Therefore, this amendment funds the Bureau through the collection of a fee imposed upon banks and financial institutions that have more than $50 billion in assets. I hope my colleagues on the other side would agree with an approach that preserves the independence of our Nation's only consumer financial watchdog without costing taxpayers a dime.

Mr. Chairman, while it is certainly a possibility, ruling this amendment out of order would simply demonstrate the hypocrisy of the Republican Party. Last week, in a letter to Chairman Sessions, I expressed my concerns about this and other provisions that inappropriately legislate on an appropriations bill. I asked him not to protect these from a point of order. Since he and his Republican colleagues have refused, I am now forced to offer this amendment.

BREAK IN TRANSCRIPT

Ms. WATERS. My amendment is a simple effort to ensure the Consumer Financial Protection Bureau remains an effective advocate for American consumers. It is an attempt to correct just one of many bad provisions in this legislation, which underfunds our Wall Street regulators, impedes our ability to identify systemic risk across the United States, and harms the ability of regulators to properly protect our Nation's investors and retirees.

Mr. Chairman, I am saddened to be back here fighting to preserve the CFPB. I am disappointed that my colleagues on the other side of the aisle have aligned themselves with predatory lenders and other bad actors in the financial system at the expense of protecting consumers. It is shameful that, once again, this House is forced to spend precious time and resources tearing down this first-of-its-kind agency which ensures that consumers have an advocate at the highest levels of government--with the power to fight for them.

So I would urge the adoption of this amendment, and I reserve the balance of my time.

BREAK IN TRANSCRIPT

Ms. WATERS. Mr. Chairman, I urge adoption of my amendment to fully fund the Securities and Exchange Commission, one of Wall Street's top sheriffs, at the President's request of $1.7 billion and at no cost to the taxpayer.

The United States has the most vibrant capital markets, which are the envy of the world. Both large and small businesses looking to raise capital are able to do so with incredible efficiency and at minimal cost. Businesses are able to do this because their investors know that there are strong rules of the road and a regulator that will hold them accountable.

The underlying bill, however, undermines the SEC by cutting nearly $300 million or nearly 20 percent from the requested level. Wall Street's cop is woefully underfunded already, and one need only look as far as its IT budget compared with just a few of the entities it oversees.

In fiscal year 2013, the IT budgets of the six largest financial institutions equaled an amount more than 100 times that of the SEC. Although my Republican colleagues suggest that they are generously providing an increase, they use budget gimmicks to mask real cuts to IT infrastructure.

The world's capital markets have grown at an ever-accelerating rate, and likewise, so has the SEC's responsibilities. Today, the SEC oversees 11,000 investment advisers, 10,000 mutual funds, 4,450 broker-dealers, the securities exchanges, clearing agencies, credit rating agencies, and other self-regulatory organizations. The SEC also reviews the disclosures of nearly 9,000 public companies.

Following the 2008 financial crisis, Congress significantly increased SEC's responsibilities by requiring oversight of hedge funds, municipal advisers, and certain derivatives by passing Dodd-Frank. My amendment is needed to support all of these activities.

The Republican bill also includes substantial carve-outs, which will lead to cuts to enforcement and examinations. The SEC will have to impose hiring freezes for lawyers that would have brought enforcement cases against bad actors.

Last year, SEC recovered $3.4 billion in 2013--or twice the amount that would fully fund the agency. The SEC will also have to furlough examiners under the Republican bill, examiners that are needed to reduce the backlog of investment advisers that have never been visited by the SEC.

There is broad opposition to the Republican funding level. The White House says:

At this level, the SEC will be unable to add critical positions in market oversight, compliance, and enforcement to carry out its financial oversight responsibilities.

What is really disappointing is that Congress can fund the SEC at any level without affecting the debt and deficit. There are no budget savings from cutting the SEC. That is because the SEC's budget is paid through tiny fees on securities transactions.

Here is what CalPERS, the largest public pension plan in the United States, says about SEC funding:

The Commission's work can't be achieved without the resources it needs to be effective. The SEC needs to be given the tools to do the job: full and independent funding.

In addition, investor advocates like the AARP, the Consumer Federation of America, as well as industry groups like the Investment Adviser Association and the Financial Planning Association all support fully funding the SEC, and so should you.

A fully-funded SEC helps America's entrepreneurs raise funds to finance jobs and development. A fully-funded SEC ensures that our markets operate efficiently. A fully-funded SEC protects hard-earned savings funding our Nation's retirement and our children's education.

I urge adoption of this amendment.

BREAK IN TRANSCRIPT

Ms. WATERS. I thank the gentleman for yielding.

Mr. Chairman and Members, listening to my friend on the opposite side of the aisle you would think that the SEC has no additional responsibilities.

As I quoted in my presentation:

The world's capital markets have grown at an ever accelerating rate, and likewise, so have the SEC's responsibilities. Today, the SEC oversees 11,000 investment advisers, 10,000 mutual funds, 4,450 broker-dealers, the securities exchanges, clearing agencies, credit rating agencies, and other self-regulatory organizations. The SEC also reviews the disclosures of nearly 9,000 public companies.

And, following the 2008 financial crisis, Congress increased SEC's responsibilities by requiring oversight of hedge funds, municipal advisors, and certain derivatives by passing Dodd-Frank.

So, my friend on the opposite side of the aisle disregards all of this as if the SEC doesn't have these expanded responsibilities. They certainly do, and they should be paid for. Again, this does not increase any debt. This is paid for through the many companies that have to pay a small fee, and they will not allow those fees to be used to support the work of the SEC and the IT needs that they have. It does not make good sense.

BREAK IN TRANSCRIPT

Ms. WATERS. Mr. Chairman, my amendment is a commonsense provision that would help reverse some of the damaging efforts directed at the SEC we have seen this Congress, efforts that have been squarely aimed at hamstringing the Commission, including: underfunding the SEC by $300 million, or 20 percent below the President's fiscal year 2015 request; bogging down the SEC in onerous cost-benefit analysis provisions that would divert resources away from important efforts, like enforcement; and myriad attempts in the Financial Services Committee to limit the information available to retirees that make decisions about whether to put their hard-earned money into public companies.

My amendment would help to counteract these efforts by providing the SEC with the authority to impose and collect reasonable user fees on federally registered investment advisers for the purpose of increasing the number and frequency of SEC examinations. This is consistent with my bill, H.R. 1627, the Investment Adviser Examination Improvement Act, which I have coauthored with Representative Delaney.

Today, investment advisers may go more than a decade before being visited by the SEC. It is absolutely essential that we improve the oversight of investment advisers, the people that manage the assets of millions of individual and institutional investors across the country. This is particularly true if we are underfunding the SEC by $300 million, as this underlying bill proposes.

The SEC currently only examines approximately 9 percent of advisers annually out of the almost 11,000 advisers registered with the Commission. The legislation and this amendment provide the SEC with additional resources to conduct more examinations and protect investors.

I believe this amendment and our bill provides the simplest, most efficient solution to the problem of inadequate adviser oversight. Also, because the user fees contemplated in the amendment would only be used to fund the regulation of investment advisers and not to subsidize other functions at the SEC, I think that this option would be more cost-effective for the industry. In fact, a study by the Boston Consulting Group supports that point.

This amendment will help the SEC to close this resource gap. By entrusting this responsibility to the Commission, it will also leverage their 70-year history of experience in this regulatory role and prevent the establishment of a duplicative SRO bureaucracy.

In addition to consumer and retiree advocates, my bill is supported by the investment adviser industry, including the Investment Adviser Association, the Financial Planning Association, the National Association of Personal Financial Advisers, and the Certified Financial Planner Board. They support my bill because they know that clear rules of the road and robust examinations bolster public confidence in the market and ultimately help their bottom line.

I urge the adoption of this amendment, and I yield back the balance of my time.

BREAK IN TRANSCRIPT

Source