Mr. President, I have come to the floor to talk about the legislation before us, which is the banking legislation that has been reported out of the Banking Committee on a bipartisan vote and awaits our attention here today. Mr. President,…
Mr. President, I have come to the floor to talk about the legislation before us, which is the banking legislation that has been reported out of the Banking Committee on a bipartisan vote and awaits our attention here today.
Mr. President, like my colleague from Washington State, I will also speak briefly to the issue that is being raised in States across America and in schools across America, where students are demonstrating their support and their solidarity with the folks in Parkland, FL, where 17 kids were lost earlier this year.
My dad was a hunter, grew up in West Virginia. I was born in West Virginia and grew up in Virginia. I bought my first BB gun when I was 10 years old, and I still have the shotgun that my grandfather gave me just before he died, when I was just a pup of a teenager. In my family, we are big believers in Second Amendment rights--to own and bear arms. We are also big advocates of using common sense with respect to weapons.
My dad was not only a hunter, he was also a gun collector. He would buy and sell guns to other people whom he knew. From the time my sister and I were little kids, my dad would always say to us, ``Just use some common sense.'' He said it a lot to us when we were growing up. We must not have had much of it because he said it very often. My dad said that it didn't make common sense for somebody who had serious mental health problems or a felony record to be able to go to a gun show and buy a weapon. It also doesn't make a lot of sense for people who can't fly on airplanes because they are on a terrorist watch list to be able to buy guns. My dad would have said that didn't make a lot of sense.
What is happening across the country is that the kids are leading us. In a verse in the Bible, it reads that the ``child shall lead them.'' I think that is really what is going on here, and I think States are already starting to address this issue in a more constructive way than we have done thus far.
My hope is that the children will lead us and that the States will lead us as well. Maybe we will be able to come to agreement on some of these issues that are respectful of our Second Amendment rights in the Constitution but that are also consistent with the kind of common sense that my dad always talked about with respect to everything, including the buying and selling of weapons.
Mr. President, I remember standing on this floor--I think it was about 8 years ago--when we debated the Affordable Care Act. That was at a time when we were spending about 18 percent of the GDP for healthcare in this country--18 percent. The Japanese were spending 8 percent. They had better results in Japan for their healthcare than we had, and they covered everybody. Think about that. We had been spending 18 percent, and they had been spending 8 percent. They had gotten better results in healthcare--in life longevity for adults and in lower rates of infant mortality. They covered everybody. When people went to bed in this country at that time, 40 million people went to bed without having any healthcare coverage. I think most of us realized at the time that that was not a good thing. I used to say that the Japanese can't be that smart and we can't be that dumb.
We passed the Affordable Care Act. There was a lot of debate and a lot of amendments offered in committees, including in the Finance Committee on which I served, Republican amendments and Democratic amendments. As we know, the final vote here on the floor was not a bipartisan vote. It was a huge issue that we were trying to address-- delivering healthcare to 300 million Americans.
For those who supported the legislation, even they realized that it was not perfect and that we were going to have
to come back at some point in time and make changes to it. The Democrats felt that way. The Republicans and Independents felt that way as well. We ended up not coming back and offering modest amendments or making tweaks to the legislation. At the end of the day, we ended up with a battle here, initially over the repeal of the ACA and later over repealing and replacing it.
I felt proud of the work we had done on the ACA. In my knowing it was not perfect, I always looked forward to coming back shortly after we had adopted it, actually, and making some tweaks. I felt the same way about Dodd-Frank, the banking legislation that we passed after the great recession about 7 or 8 years ago.
I will just remind everybody, especially our young pages here today, who were probably about 7 or 8 years old at the time, that we didn't fall into a burning ring of fire--we fell off a cliff. The unemployment rate shot up to 10 percent, and banks stopped lending money to send kids to school or to allow people to buy a car or a house. Credit was shut off for businesses as well. The unemployment rate skyrocketed. Our economy was locked up, and we felt that we had to do something.
What we tried to do was to figure out how we ended up in that mess in the first place. What had gone on is that the people who wanted to buy houses, who were not creditworthy, ended up being loaned money by banks across the country to buy houses. In many cases, the appraisals for the houses were not worth the paper they were written on. The creditworthiness of the buyers was not worth the paper it was written on as well. We had unqualified people who were trying to buy property. They were unable, realistically, to repay their loans. It all worked just fine until we went into a slump. As the unemployment rate started to go up, people found it more and more difficult to make their payments.
In the olden days, I remember the first house I lived in when I was a kid. My parents borrowed money from a bank for a mortgage, and then they paid it off to that bank. I remember, when they paid off the mortgage to the house they owned in Danville, VA, it was a big deal. My dad actually took the mortgage and burned it up outside, not inside our house.
Yet, 7 or 8 years ago, for a lot of people, after they borrowed money from banks, the banks sold those mortgages to somebody else, oftentimes to Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac would package those mortgages into mortgage-backed securities--into a security that could be sold to investors in this country and to investors around the world. As long as housing prices continued to rise, everything worked fine. When they stopped rising and started falling, a number of those mortgage-backed securities were riddled--almost like Swiss cheese--with bad mortgages. As more and more people failed to be able to pay their mortgages, the mortgage-backed securities lost their value. Those investors around the world who had invested seriously in mortgage- backed securities got scared, and it started to spiral down from there.
That was not really the only reason we got into a burning ring of fire all those years ago, but it was a big reason. Part of what we decided to do with Dodd-Frank was to make sure that didn't happen again. We would make other mistakes, but we were not going to make that mistake again.
The legislation was passed. Again, not everybody was for it. I voted for it and helped to write some of the provisions in the bill. I knew at the time, as I think we all did, that anything that big--a massive change in our banking regulatory approach in this country--was going to have to be tweaked and revisited just like the Affordable Care Act. It has taken a while.
For the most part, our Republican friends--not all and probably not including the Presiding Officer--were interested in repealing Dodd- Frank. I and, I think, the majority of folks on our side were interested in fixing the provisions that needed to be fixed but not in throwing the baby out with the bath water.
The legislation before us today was reported out of the Banking Committee but not unanimously. It was reported out, I think, last fall, by the chairman of the committee, Mike Crapo from Idaho, whose name is on the bill. I am going to spend some time here today talking about what it does and what it doesn't do.
If the bipartisan bill before us becomes law, 90 percent of Dodd- Frank will remain unchanged. Let me say that again. If the banking bill before us today becomes law, 90 percent of Dodd-Frank will remain unchanged.
The legislation that has been authored by Senator Crapo and others does not touch some of Dodd-Frank's most important reforms. Some of those most important reforms include the Consumer Financial Protection Bureau. It remains. The Financial Stability Oversight Council remains. It is affectionately known as FSOC, and it works to identify and to address overarching threats to the financial system. The regulations that crack down on risky derivative trading remain, and the ability of the FDIC to wind down failing complex institutions through an orderly liquidation authority remains.
Under this legislation, the Federal Reserve would retain the authority to apply enhanced standards to any bank with over $100 billion in assets. In addition, banks with over $100 billion would still be subject to numerous regulatory requirements. Those requirements include, one, meaningful stress tests; two, increased capital requirements to provide a cushion in tough times and bad times; and, third, vital international reforms to leverage in liquidity standards.
I have a number of charts. I have more charts today than I think I have ever brought to the Senate floor. I promise we will be done by sundown. It will seem that long, but in reality it will not be.
Let me start off, if I could, with a couple of claims made about the bill and, then, talk about the reality.
One of the claims is that this bill would gut Wall Street reform that was passed after the financial crisis to prevent another global meltdown.
That is the claim. Here is the reality. This bipartisan bill makes targeted, commonsense fixes that will provide tangible relief to community banks and credit unions, while leaving in place the rules and regulations that will keep Wall Street accountable.
Before we look at the next claim, like the Presiding Officer, I do customer calls all over my State. The Presiding Officer has a big State, and I have a little State. I visit businesses, schools, hospitals--you name it. I do customer calls literally every week, including the credit unions and small community banks. Sometimes they come to see me, and oftentimes I go to see them. For years, during those customer calls, visiting credit unions and community banks, especially in the central and southern part of our State, they would say to us: We didn't create the financial meltdown that led us to the great recession. Yet we bear the burden of the regulatory reform for that meltdown.
It wasn't their fault. We need a lot of the regulation that is adopted in Dodd-Frank, but keep in mind that credit unions and community banks didn't cause the problem but yet they bear a big part of the burden of fixing it.
Another claim is that this bill rolls back stress test requirements for all big banks. I will say it again. This bill rolls back stress test requirements for all big banks. That is the claim.
Here is the reality. This bill continues to require stress tests for all banks over $100 billion in assets. That would be the largest financial institutions. That is the reality.
The claim is that this bill does nothing to protect consumers. That is the claim--that the bill does nothing to protect consumers.
Here is the reality. This bill actually creates new protections. It provides free credit freezes and allows year-long fraud reports. It allows parents to turn credit reporting on and off for minors. It provides free credit monitoring for all Active-Duty servicemembers.
I am a retired Navy captain. Our Presiding Officer is a colonel--Navy salute.
It was one of the things that Senator Coons and I insisted on in order to support this legislation, and that was to provide free credit monitoring for all Active-Duty servicemembers as part of the bill.
Another reality in terms of new protections is that it encourages banks to report suspicious behavior they become aware of.
That is a little bit of the claims and the reality. I can go on with that, but I will not. I will actually turn to the words of other people, starting off with questions from Senator Jon Tester of Montana, a senior member of the Banking Committee. The first question he asked last November was to a fellow who had been nominated to be Chairman of the Federal Reserve, Jay Powell, who was confirmed on this floor with 80 or 90 votes--a big bipartisan vote.
Senator Tester asked Mr. Powell, who was a Governor, if I am not mistaken, at the time within the Federal Reserve System. He asked:
Part of that bill--
The bill before us today--
is eliminating the Volcker Rule compliance for community
banks that have less than $10 billion, as long as they have
less than 5 percent, trading assets and liabilities. Any
concerns there?
The witness, Federal Reserve Chairman Jay Powell, said: ``None.''
Senator Tester went on to ask the Federal Reserve Chairman--I think this was in February of last year. Senator Tester, my colleague, is a farmer out in Montana. He asked Jay Powell, who was not yet the Chairman of the Federal Reserve:
But I'm a dirt farmer, OK? I just, kind of, read things as
they are and don't read a lot of extra stuff into it. You're
the--you're the man on the Fed and so I need to know your
opinion. Does 2155 require the Federal Reserve to weaken any
of the Dodd-Frank enhanced prudential standards for . . .
[foreign banks] such as Deutsche Bank, UBS or Barclays?
This was the response of Chairman Jay Powell of the Federal Reserve:
It does not, according to my reading of the text.
I will just add that this is the text of the bill.
Senator Crapo, the chairman of the Banking Committee, has put together this bipartisan legislation, with a lot of help from Jon Tester and others. In a hearing last July, he questioned the woman who was then-Chairman of the Federal Reserve, Janet Yellen. I think she did a very good job. She stepped down, and I thank her for her service and leadership.
Senator Crapo said:
There appears to be growing consensus that Congress should
consider changing the $50 billion SIFI threshold [for big
banks]; also, changing the Volcker rule, exempting certain
institutions from company-run stress testing requirements and
reducing the burdens on community banks and credit unions.
He went on to ask:
Do you agree that it would be appropriate for Congress to
act in each of those areas?
He asked: Do you believe it would be appropriate for Congress to act in each of those areas--changing the SIFI threshold, changing the Volcker rule, exempting certain institutions from stress test requirements, reducing the burdens on community banks and credit unions.
Do you agree that it would be appropriate for Congress to
act in each of those areas?
She said four words: ``I do--I do.''
Again, in February of last year, Federal Reserve Chairman Janet Yellen, on the Volcker rule, said:
So, yes, let me reiterate what I said there. It's important
to look for every way we can to mitigate the regulatory
burden. What we've suggested previously and I would reiterate
with respect to Dodd-Frank is that Congress might want to
consider exempting community banks from the Volcker rule. . .
.
That is what she said last February, a year ago.
Then, former Federal Reserve Governor Daniel Tarullo spoke. I think his position is held now by Andy Cohen. Last year, Daniel Tarullo said:
We have found that the $50 billion in assets threshold
established in the Dodd-Frank Act for banks to be
``systemically important,'' and thus subject to a range of
stricter regulations, was set too low. . . .
He went on to say:
The fact that community banks are subject at all to some of
the Dodd-Frank Act rules seems unnecessary. . . .
I will say it again.
The fact that community banks are subject at all to some of
the Dodd-Frank Act rules seems unnecessary to protect safety
and soundness, and quite burdensome on the very limited
compliance capabilities of small banks.
Dan Tarullo said that last April.
Here are the words of former Federal Reserve chairman Paul Volcker, whom I got to know and work with when I was in the House of Representatives. He was Chairman of the Federal Reserve, and I was on the Banking Committee. He was a giant then and still is--literally and figuratively.
Here are his words in February of this year. He said:
I am pleased that the Senate Banking Committee has forged
ahead with meaningful bipartisan financial reform to ease the
unnecessary regulatory strain on small banks, helping them to
flourish as an engine of economic prosperity. . . .
He goes on to say that he doesn't agree with every single word of the legislation before us today, but he concluded by saying:
I thank you for the opportunity to comment on this
important piece of legislation and look forward to its swift
passage.
This is in a letter to Senator Brown, I believe. It doesn't mean he agrees with every single sentence and paragraph, but he looks forward to it.
Former Congressman and former Banking Committee chairman and my colleague Barney Frank, spoke on whether Dodd-Frank needs reforms in a CNBC interview last February. He was asked if Dodd-Frank needed reforms, and he said: ``Of course.''
On the $50 billion SIFI threshold, he said: ``I think it should be changed,'' and he went on to say: ``It's too low, I believe it is.''
Again, former Congressman Barney Frank on November 27 of last year said:
If this bill became law tomorrow, well over 90 percent of
the Wall Street reform bill would be unchanged. . . . The
Consumer Financial Protection Bureau; the strict regulation
of derivative trading; the orderly liquidation authority; the
risk retention requirements on securitizations and most other
provisions would remain in full force. . . .
In full force.
We are almost done here. I thank my colleague from Vermont for his patience.
This is former Congressman Barney Frank on relief for community banks. These words are from the CNBC interview last February, a year ago.
With regard to banks under $10 billion, some of them are
spending more money than they should complying with
provisions that were never really intended to apply to them
and I understand that. The Volcker Rule which says that large
banks should do more lending and less derivative trading,
which I think is a wholly good thing, a number of small banks
which never did much derivative trading are overdoing the
effort to show [that] they aren't there. I would exempt some
of the banks under $10 billion from some of those rules and I
would agree to raise the $50 billion threshold.
Last but not least, a couple of comments more--one from the Bipartisan Policy Center recently; the words of two of the folks from there:
As U.S. politics descends ever further into partisanship,
there are still signs that old-fashioned legislating is not
dead. This week, the Senate Banking Committee will mark up
one of the first significant pieces of financial regulatory
legislation in years with real bipartisan support. . . .
These are not major changes. Yet taken together, they are
constructive and should provide greater incentives to extend
credit, particularly to Main Street small businesses, without
undermining the progress made since the crisis in making the
financial system safer.
This statement is from the president and CEO of the Independent Community Bankers of America:
The markup of S. 2155 is a rare opening for real, impactful
relief that will strengthen economic growth, job creation,
and consumer protection. It is the culmination of years of
collaborative effort to achieve consensus among Members of
Congress across the spectrum and community bankers in their
home States and districts. Community bankers urge all members
of the Senate Banking Committee to vote YES on S. 2155.
This is from the president and CEO of the Credit Union National Association, or CUNA:
This bill includes credit union-specific provisions that
provide meaningful regulatory relief, a sign that
policymakers are praying close attention to the needs of
credit union members. We thank Senator Crapo and his
colleagues for working across party lines to advance
regulatory relief legislation that benefits community
financial institutions, and look forward to continuing to
work closely with them as the bill moves through the
legislative process.
I hope we will keep these words in mind in the hours and days ahead as we take up this important legislation.
I have no interest in undoing Dodd-Frank. I am a strong supporter of Dodd-Frank. I helped to write some of the provisions in Dodd-Frank, and I have no interest in pulling the plug on Dodd-Frank.
Can we make some reasonable changes? Yes, we can. I felt the same way about the Affordable Care Act.
With that, I yield the floor to my friend from Vermont, and I thank him for his patience.