Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, spoke on the House floor opposing H.R. 6392, a bill that would let President-elect Trump’s Wall Street-friendly administration deregulate 27 of the largest banks in the country.
“H.R. 6392 would repeal Dodd-Frank’s $50 billion threshold, above which banks are subject to closer regulatory scrutiny, and prevent the Federal Reserve Board from regulating these banks,” Waters said. “Instead, it would hand over that responsibility to the Financial Stability Oversight Council, or FSOC. In order to regulate the banks, the FSOC would have to go through a byzantine and litigious process of designation, which takes two to four years to complete. Even if a potential Treasury Secretary [Steven] Mnuchin decided to regulate his former employer, by the time he got around to it, the damage would likely already be done.”
She added: “I suppose passing this legislation is just the Republican Congress’s way of giving him a ‘signing bonus’ for coming into government.”
The full text of Waters’ statement, as prepared for delivery, is below:
Mr. Chairman, I rise today in strong opposition to H.R. 6392, the first step in the Trump agenda to deregulate Wall Street, despite candidate Trump’s pledges to hold elite bankers accountable. In fact, as we debate this bill today, Trump Tower’s revolving door is spinning with Wall Street insiders. Yes, in a skyscraper in Midtown Manhattan, Trump and his transition team are plotting their agenda to weaken financial reform and bring us back to the pre-crisis Wild West days, when banks could gamble with taxpayer money. Bank stocks are up on news of gifts to come, and newspaper headlines are already documenting Republicans’ aggressive plans.
In fact, President-elect Trump just announced that he will nominate Steven Mnuchin, a former Goldman Sachs executive who now sits on the board of the megabank CIT, to be his Treasury Secretary. Mr. Mnuchin’s bank is just one of 27 banks that stands to benefit directly from this legislation.
Though CIT crashed and went bankrupt during the crisis because of high-risk commercial lending and subprime loans, somehow Mr. Mnuchin still managed to sign an employment deal handing him $4.5 million a year in 2016. I suppose passing this legislation is just the Republican Congress’s way of giving him a “signing bonus” for coming into government.
We enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act in response to the stunning greed and regulatory failures in our financial system. And yet with this bill, the Republicans are displaying a staggering degree of historical amnesia. This bill is the epitome of that dangerous agenda, with H.R. 6392 gutting our banking regulators’ oversight of $4.5 trillion in banking assets, or approximately 30 percent of the industry currently subject to enhanced rules.
Make no mistake: this bill is not about helping community banks – because 99 percent of our country’s community banks and credit unions are already exempt from most rules in Dodd-Frank. It is also not about tailoring regulations for regional banks – Wall Street Reform already required that, and the Federal Reserve is already taking steps to do so.
No, this bill is about a wholesale regulatory exemption for just 27 of the largest banks in America – banks with one hundred, two hundred, even four hundred billion dollars in assets. Many of the types of banks that would benefit from this bill failed spectacularly during the financial crisis. In fact, large bank holding companies with more than $50 billion in assets received twice as much bailout money per dollar than banks with less than $50 billion in assets.
And contrary to the talking points from the other side of the aisle, these mega-regional banks are not just big community banks. No, these regional banks were some of the worst players in predatory, subprime lending leading up to the financial crisis. They have preyed on minority communities and they have passed the buck onto taxpayers when their bets failed.
Remember Countrywide, a $200 billion thrift? They were the number three subprime mortgage originator and number one issuer of subprime mortgage bonds in 2006. They are a poster child of the crisis.
Remember Washington Mutual, with $300 billion in assets, whose hometown paper the Seattle Times described as “predatory?”
Remember Wachovia, with their exotic “pick-a-payment” mortgage loans? Remember in October of 2008, when they posted a $24 billion quarterly loss, and the FDIC had to facilitate a midnight acquisition by Wells Fargo?
Remember New Century? Or Ameriquest? Or Option One?
This bill would enable more blow-ups like these.
H.R. 6392 would repeal Dodd-Frank’s $50 billion threshold, above which banks are subject to closer regulatory scrutiny, and prevent the Federal Reserve Board from regulating these banks. Instead, it would hand over that responsibility to the Financial Stability Oversight Council, or FSOC. In order to regulate the banks, the FSOC would have to go through a byzantine and litigious process of designation, which takes two to four years to complete. Even if a potential Treasury Secretary Mnuchin decided to regulate his former employer, by the time he got around to it, the damage would likely already be done.
It’s also significant to note that Republicans have repeatedly tried to dismantle the FSOC and its existing designation authority for large non-banks. They have called the Council “unconstitutional,” introduced bills to make it harder for the FSOC to do its job, and helped companies like MetLife fight its designation in court. What’s more, Chairman Hensarling’s sweeping Wall Street deregulation bill – the “Wrong Choice Act” – would repeal this exact same designation authority altogether. Why is the Majority even considering this bill today when the Chairman’s Wall Street Reform repeal package would render this bill moot?
It is clear that this is just the first act in a long, dangerous play that will continue well into next year.
I therefore urge my colleagues to join me in opposing this harmful bill.