Today, Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, gave the following floor statement in opposition to H.R. 1116, the so-called “Taking Account of Institutions with Low Operation Risk Act of 2017” or the TAILOR Act, a bill that directs financial regulators to prioritize reducing costs for financial institutions, including megabanks, over protecting consumers and the economy.
As Prepared for Delivery
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 costs for industry over protecting consumers and the economy.
It was 10 years ten years ago today that Bear Stearns collapsed, and the Federal Reserve used taxpayer funding to arrange a shotgun wedding to JPMorgan 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 unawares again when it passed the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Although some claim this measure 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 “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 an 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.”
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 consumers.
This set of standards not only applies to all future guidance and rulemaking, but retroactively to all of the rulemakings of the past seven 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.
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. And, the Consumer Bureau engages in a similar look back review five 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’ve been on the 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 the law did not impose a one-size-fits-all approach on every financial institution. 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 long-lasting damage to the economy and the 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, which would force the regulators to prioritize costs to Wall Street over benefits to consumers and the economy, and expose rulemakings to needless litigation because of the nebulous standards in the bill.
Thank you, and I reserve the balance of my time.