[Congressional Record Volume 164, Number 60 (Friday, April 13, 2018)]
[House]
[Pages H3214-H3223]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
VOLCKER RULE REGULATORY HARMONIZATION ACT
Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 811, I call
up the bill (H.R. 4790) to amend the Volcker rule to give the Board of
Governors of the Federal Reserve System sole rulemaking authority, to
exclude community banks from the requirements of the Volcker rule, and
for other purposes, and ask for its immediate consideration in the
House.
The Clerk read the title of the bill.
The SPEAKER pro tempore (Mr. Mitchell). Pursuant to House Resolution
811, in lieu of the amendment in the nature of a substitute recommended
by the Committee on Financial Services printed in the bill, an
amendment in the nature of a substitute consisting of the text of Rules
Committee Print 115-67, is adopted, and the bill, as amended, is
considered read.
The text of the bill, as amended, is as follows:
H.R. 4790
Be it enacted by the Senate and House of Representatives of
the United Sates of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Volcker Rule Regulatory
Harmonization Act''.
SEC. 2. RULEMAKING AUTHORITY UNDER THE VOLCKER RULE.
(a) In General.--Paragraph (2) of section 13(b) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1851(b)(2)) is amended
to read as follows:
``(2) Rulemaking.--
``(A) In general.--The Board may, as appropriate, consult
with the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, the Securities and Exchange
Commission, or the Commodity Futures Trading Commission to
adopt rules or guidance to carry out this section, as
provided in subparagraph (B).
``(B) Rulemaking requirements.--In adopting a rule or
guidance under subparagraph (A), the Board--
``(i) shall consider the findings of the report required in
paragraph (1) and, as appropriate, subsequent reports;
``(ii) shall assure, to the extent possible, that such rule
or guidance provide for consistent application and
implementation of the applicable provisions of this section
to avoid providing advantages or imposing disadvantages to
the companies affected by this subsection and to protect the
safety and soundness of banking entities and nonbank
financial companies supervised by the Board; and
``(iii) shall include requirements to ensure compliance
with this section, such as requirements regarding internal
controls and recordkeeping.
``(C) Authority.--The Board shall have sole authority to
issue and amend rules under this section after the date of
the enactment of this paragraph.
``(D) Conforming authority.--
``(i) Continuity of regulations.--Any rules or guidance
issued under this section prior to the date of enactment of
this paragraph shall continue in effect until the Board
issues a successor rule or guidance, or amends such rule or
guidance, pursuant to subparagraph (C).
``(ii) Applicable guidance.--In performing examinations or
other supervisory duties, the appropriate Federal banking
agencies, the Securities and Exchange Commission, and the
Commodity Futures Trading Commission, as appropriate, shall
update any applicable policies and procedures to ensure that
such policies and procedures are consistent (to the extent
practicable) with any rules or guidance issued pursuant to
subparagraph (C).''.
(b) Conforming Amendments.--Section 13 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1851) is amended--
(1) by striking ``the appropriate Federal banking agencies,
the Securities and Exchange Commission, and the Commodity
Futures Trading Commission,'' each place it appears and
inserting ``the Board'';
(2) by striking ``appropriate Federal banking agencies, the
Securities and Exchange Commission, and the Commodity Futures
Trading Commission'' each place it appears and inserting
``Board'';
(3) in subsection (c)(5), by striking ``Notwithstanding
paragraph (2)'' and all that follows through ``provided in
subsection (b)(2),'' and inserting ``The Board shall have the
authority''; and
(4) in subsection (d)(1)--
(A) in subparagraph (F)(ii)--
(i) by striking ``the appropriate Federal banking
agencies'' and inserting ``the Board''; and
(ii) by striking ``have not jointly'' and inserting ``has
not''; and
[[Page H3215]]
(B) in subparagraph (G)(viii), by striking ``appropriate
Federal banking agencies, the Securities and Exchange
Commission, or the Commodity Futures Trading Commission,''
and inserting ``Board,''.
SEC. 3. ENFORCEMENT; ANTI-EVASION.
(a) In General.--Subsection (e) of section 13 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1851(e)) is amended to
read as follows:
``(e) Enforcement; Anti-evasion.--
``(1) Appropriate federal banking agency.--Notwithstanding
any other provision of law except for any rules or guidance
issued under subsection (b)(2), whenever the appropriate
Federal banking agency has reasonable cause to believe that a
banking entity or nonbank financial company supervised by the
Board has made an investment or engaged in an activity in a
manner that either violates the restrictions under this
section, or that functions as an evasion of the requirements
of this section (including through an abuse of any permitted
activity), such appropriate Federal banking agency shall
order, after due notice and opportunity for hearing, the
banking entity or nonbank financial company supervised by the
Board to terminate the activity and, as relevant, dispose of
the investment.
``(2) Securities and exchange commission and commodity
futures trading commission.--
``(A) In general.--Notwithstanding any other provision of
law except for any rules or guidance issued under subsection
(b)(2), whenever the Securities and Exchange Commission or
the Commodity Futures Trading Commission, as appropriate, has
reasonable cause to believe that a covered nonbank financial
company for which the respective agency is the primary
Federal regulator has made an investment or engaged in an
activity in a manner that either violates the restrictions
under this section, or that functions as an evasion of the
requirements of this section (including through an abuse of
any permitted activity), the Securities and Exchange
Commission or the Commodity Futures Trading Commission, as
appropriate, shall order, after due notice and opportunity
for hearing, the covered nonbank financial company to
terminate the activity and, as relevant, dispose of the
investment.
``(B) Covered nonbank financial company defined.--In this
paragraph, the term `covered nonbank financial company' means
a nonbank financial company (as defined in section 102 of the
Financial Stability Act of 2010) supervised by the Securities
and Exchange Commission or the Commodity Futures Trading
Commission, as appropriate.''.
(b) Rule of Construction.--Nothing in this section shall be
construed to abrogate, reduce, or eliminate the backup
authority of the Federal Deposit Insurance Corporation
authority under the Dodd-Frank Wall Street Reform and
Consumer Protection Act (12 U.S.C. 5301 et seq.), the Federal
Deposit Insurance Act (12 U.S.C. 1811), or Federal Deposit
Insurance Corporation Improvement Act of 1991.
SEC. 4. EXCLUSION OF COMMUNITY BANKS FROM VOLCKER RULE.
Section 13(h)(1) of the Bank Holding Company Act of 1956
(12 U.S.C. 1851(h)(1)) is amended--
(1) in subparagraph (D), by redesignating clauses (i) and
(ii) as subclauses (I) and (II), respectively, and adjusting
the margins accordingly;
(2) by redesignating subparagraphs (A), (B), (C), and (D)
as clauses (i), (ii), (iii), and (iv), respectively, and
adjusting the margins accordingly;
(3) in the matter preceding clause (i), as so redesignated,
in the second sentence, by striking ``institution that
functions solely in a trust or fiduciary capacity, if--'' and
inserting the following: ``institution--
``(A) that functions solely in a trust or fiduciary
capacity, if--'';
(4) in clause (iv)(II), as so redesignated, by striking the
period at the end and inserting ``; or''; and
(5) by adding at the end the following:
``(B) that does not have and is not controlled by a company
that has--
``(i) more than $10,000,000,000 in total consolidated
assets; and
``(ii) total trading assets and trading liabilities, as
reported on the most recent applicable regulatory filing
filed by the institution, that are more than 5 percent of
total consolidated assets.''.
The SPEAKER pro tempore. The bill, as amended, shall be debatable for
1 hour equally divided and controlled by the chair and ranking minority
member of the Committee on Financial Services.
The gentleman from Texas (Mr. Hensarling) and the gentlewoman from
California (Ms. Maxine Waters) each will control 30 minutes.
The Chair recognizes the gentleman from Texas.
General Leave
Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks and include extraneous material on the bill under
consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Texas?
There was no objection.
Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, another day, another strong bipartisan bill presented to
the House by the House Financial Services Committee.
I take great pride in that fact.
Today, I rise in strong support of H.R. 4790, the Volcker Rule
Regulatory Harmonization Act.
I want to thank, first, the gentleman from Arkansas (Mr. Hill) for
his leadership on the issue and so many other issues in front of our
committee.
And I want to thank his bipartisan partner, the Democrat gentleman
from Illinois (Mr. Foster) for his leadership on his side of the aisle
on this very important piece of legislation.
As a result of their hard work, this bill was reported out of our
committee, Mr. Speaker, 50-10, which means 80 percent--80 percent--of
our colleagues on the committee supported the legislation, including a
majority of the Democrats.
Now, Mr. Speaker, we enjoy, in America, the deepest, strongest, and
most liquid capital markets, frankly, the world has ever known, and
that helps us have a very strong, strong progrowth economy.
Our capital markets are vital; vital to the job growth and job-
creating machine in America. Our capital markets provide very important
funding to Main Street businesses and to entrepreneurs for short-term
operations and long-term growth.
Main Street businesses, for example, like an equipment and party
rental store in my district, whose owner is named Arlis, who told me,
``The number one issue for me to keep the doors open is access to
capital.''
That is why it is so critical that we ensure that he has access to
capital.
I also heard from Jeff from Henderson County in the Fifth District of
Texas that I have the privilege of representing. He owns a farm and
ranch store, and he explained, ``During the past year, I have been able
to expand my business location and double my inventory. I have been
able to hire additional employees as I grow. Without access to credit,
things like this would not be possible.''
Just two quick little vignettes about how in our economy capital
formation, access to credit, how important that is for the job engine
of America.
So again, Mr. Speaker, members of the House Financial Services
Committee on both sides of the aisle have been working very hard on
bipartisan pieces of legislation that can result in smarter, more
efficient, more effective regulation that our hardworking taxpayers
expect so that we can have robust capital formation and our job
creators, our small business people like Jeff and Arlis, can continue
to grow and prosper.
H.R. 4790 is just one example of this type of legislation.
Specifically, Mr. Speaker, H.R. 4790 will streamline the regulatory
authority set forth in section 619 of the Dodd-Frank Act, a section
more commonly known as the Volcker rule. It provides a framework that
will provide increased regulatory clarity for entities that must comply
with the Volcker rule. It does this by consolidating--consolidating--
rulemaking authority and interpretation with the Federal Reserve Board,
and for purposes of examination and enforcement, designating the
primary Federal regulator for a covered entity as the sole regulator in
those capacities.
The challenge here, Mr. Speaker, is that some entities can have as
many as five different regulators interpreting the Volcker rule and
five different regulators enforcing the Volcker rule. Sometimes they
conflict with each other, Mr. Speaker, and, frankly, the entity doesn't
know what to do. You cannot have an economy based on the rule of law
when, frankly, you don't know what the law says.
So the gentleman from Arkansas (Mr. Hill) brings a very simple bill
to the House floor that says we are going to have one--one--regulator
in charge of interpreting the rules, and the primary regulator is going
to be in charge of enforcing the rule. It is common sense. It creates
efficiency.
{time} 0915
Now, I want to be clear about one thing: H.R. 4790 does not repeal
the Volcker rule. I wish it did, but it doesn't. That is not what we
are debating here today.
Outside of providing important relief to community banks--bipartisan
regulatory relief that, by the way, has already been approved by a
strong two-
[[Page H3216]]
thirds of our Senate colleagues--this bill doesn't require any changes
to the Volcker rule itself.
I highlight this because this legislation, again, represents
something that Members of Congress should agree on, that regardless of
how you stand on a particular rule or regulation, it at least ought to
be clear, and there ought to be one interpretation and one enforcer of
the rule so that you know what the rule is. You can't abide by the rule
if you don't know what the rule is. This is only common sense, and it
can only lead to, again, stronger, deeper, more liquid capital markets
to help our job creators.
So regardless of whether we support the Volcker rule or we wish to
repeal it, hopefully, we can at least agree that it shouldn't be
unnecessarily complex and burdensome and virtually impossible to abide
by. And so that, again, is what H.R. 4790 is simply trying to do.
Mr. Speaker, I commend this piece of legislation to all of my
colleagues. It is a very important piece of legislation, again,
strongly bipartisan. Eighty percent of the Members of the House
Financial Services Committee support it.
Again, I want to commend the leadership of the gentleman from
Arkansas (Mr. Hill), and with that, I reserve the balance of my time.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such
time as I may consume.
Mr. Speaker, I would like to start off with a quote from Speaker Paul
Ryan in a 2012 townhall meeting. This is what he said to his
constituents: ``If you're a bank and you want to operate like some
nonbank entity like a hedge fund, then don't be a bank. Don't let banks
use their customers' money to do anything other than traditional
banking.''
I agree, and that is why Congress passed the Volcker rule in the wake
of the 2008 financial crisis, to prevent taxpayer-backed banks from
engaging in risky, speculative activities like owning hedge funds. But
since that time, Republicans have engaged in a relentless attack
against the Volcker rule at the behest of Wall Street megabanks.
H.R. 4790, the so-called Volcker Rule Regulatory Harmonization Act,
is the latest threat to that rule. Specifically, H.R. 4790, contains
two problematic provisions that would create a loophole in the Volcker
rule and make it easier for the Trump administration to weaken or
repeal it.
Leading up to the financial crisis, Wall Street megabanks engaged in
proprietary trading, which is essentially speculative, highly leveraged
betting that benefits their bottom line but uses federally insured
loans backed by the U.S. taxpayer.
These banks gambled on exotic financial instruments like
collateralized debt obligations comprised of risky subprime mortgages
and credit default swaps, which even the legendary investor, Warren
Buffett, criticized as ``financial weapons of mass destruction.''
When the Housing bubble finally burst, these bets led to massive
losses and required the Federal Government to bail out the banking
industry with trillions of taxpayer dollars to stop an economic
catastrophe. To protect the American taxpayer and the economy from this
sort of risky trading as well as to return banks to the business of
helping consumers and small businesses, Congress included the Volcker
rule's ban on proprietary trading as part of the Dodd-Frank Wall Street
Reform and Consumer Protection Act.
Specifically, the Volcker rule prohibits taxpayer-backed banks from
engaging in risky proprietary trading and from owning hedge funds and
private equity funds. It also prohibits banks from owning the very same
risky collateralized debt obligations that accelerated the 2008 crisis.
According to Martin Gruenberg, Chairman of the Federal Deposit
Insurance Corporation, that is, the FDIC, which is the agency charged
with protecting taxpayers from bank bailouts, ``had it,'' this
prohibition, ``been in place then, the Volcker rule would have
constrained the proliferation of such instruments.''
The result today is less reckless risk-taking by Wall Street
megabanks and a stronger financial system. And despite dire predictions
by Republicans, our banks have returned to lending to consumers and
businesses, and our financial markets are adapting and thriving.
For example, since passage of Dodd-Frank, bank lending to businesses
has increased 80 percent; and in the bond market, which has long been
dominated by bank dealers, we have seen record-new bond issuance by
companies, States, cities, and towns seeking to raise funds and record
trading volumes in those bonds. Most other metrics also show a healthy
corporate bond market.
Nevertheless, H.R. 4790 is just the latest Republican attempt to
weaken the Volcker rule. First, the bill would provide a blanket
exemption from the Volcker rule for 97 percent of our Nation's banks
which have consolidated assets of $10 billion or less and with less
than 5 percent of those assets in trading assets.
To be clear, most community banks do not engage in any trading
activities and, therefore, have no compliance requirements under the
rule. However, H.R. 4790 would give all community banks the
congressional thumbs-up to begin speculative trading instead of
focusing on the traditional business of banking. It also makes
community banks prime targets for hedge fund salesmen.
Now, why is this an area of concern for me? It is an area of concern
because I hear the community banks when they say that their numbers are
going down because of mergers and consolidation. This bill does not
help with this problem. It makes it worse because it sends a shining
beacon to hedge funds all over the country that they can peddle risky
and questionable investments to community banks, and the regulators
will be none the wiser.
I am extraordinarily concerned with the extent of the affordable
housing crisis our Nation is facing. We need banks to invest in housing
and in our communities. I believe that community banks can provide
those kind of investments.
But I am also concerned that, if the hedge funds can prey on
community banks with little oversight, then they will be unable to
provide the kinds of investments in housing and small businesses that
communities need. Instead, we will see more community banks investing
in hedge funds and possibly leaving these communities behind.
So when Members ask: How can we create more affordable housing or
address the issues that experts like Dr. Matthew Desmond are raising on
the housing crisis in America, one thing that we can do is not think
narrowly about the impact of financial services legislation, and,
particularly, legislation like H.R. 4790 that can create lasting,
unintended consequences if not carefully considered.
We should think broadly and realize that the policies that we make
for banks can have real impacts on the communities they serve. And the
regulators and experts have done just that. They have carefully
considered the bill's provisions and the unintended consequences that
could ensue.
That is why the blanket carve-out in this bill is opposed by former
Federal Reserve Chairman and the rule's namesake, Paul Volcker, who has
said: ``I know from my long experience in banking and savings and loan
regulation that plausibly small loopholes can be `gamed' and exploited
with unfortunate consequences.'' Paul Volcker was Chairman of the
Federal Reserve for part of the savings and loan crisis, which, during
that time, more than 1,000 S&Ls failed, fully one-third of the
industry.
The exemption is also opposed by FDIC Chairman Gruenberg, FDIC Vice
Chairman Thomas Hoenig, and investors and advocates.
If we truly want to reduce regulatory burdens on community banks that
engage in permitted trading activity, we should be looking at other
ways to accommodate them, such as by creating a presumption of
compliance with the Volcker rule, which reduces compliance costs
without opening up a loophole. Rather than encouraging banks,
especially community banks, to make speculative bets on hedge funds or
derivatives, we should be doing everything possible to ensure banks are
focused on supporting their communities by offering mortgages and
commercial loans.
Second, H.R. 4790 would repeal the requirement that the Federal
Reserve, FDIC; Office of the Comptroller of Currency, that is the OCC;
Securities and Exchange Commission, that is the SEC; and the Commodity
Futures Trading
[[Page H3217]]
Commission, that is the CFTC, work together to jointly implement the
rule. Instead, the bill would delegate sole rulemaking authority to the
Federal Reserve, which could choose to consult or not consult with the
other regulators.
This would unreasonably cut the FDIC out of any future rule changes,
even though it is the regulator charged with protecting deposit
insurance against the very risky, speculative activities the Volcker
rule was designed to prevent.
It would also cut the OCC out of the rulemaking process, even though
it oversees institutions that account for approximately 40 percent of
bank holding company trading revenues.
And it would cut out the SEC and the CFTC, even though those agencies
have the expertise and jurisdiction over broker dealers and future
traders and their marketmaking activities.
Worse, appointing the Fed a single regulator would make it easier for
the Trump administration to weaken and repeal the Volcker rule, even
though it was expeditiously promulgated in 2 years and the regulators
are now working together to make appropriate changes. While the bill
would at least allow the appropriate banking regulators--SEC and CFTC--
to enforce the rule, such enforcement authority is meaningless if the
Volcker rule is effectively gutted by the Trump administration.
But this is what my Republican colleagues want. Chairman Hensarling's
600-page Big Bank giveaway, H.R. 10, known as the ``Wrong'' CHOICE Act,
would have repealed the Volcker rule outright. H.R. 4790 is merely the
latest attempt to do the same thing.
Mr. Speaker, I strongly oppose H.R. 4790, and I reserve the balance
of my time.
Mr. HENSARLING. Mr. Speaker, I yield myself 30 seconds just to say I
am not sure what bill the ranking member is debating. It does not
appear to be H.R. 4790, and I have my own quotes.
Paul Volcker, himself, said the Volcker rule is ``much more
complicated than I would like to see.''
President Obama's Federal Reserve Chairman Janet Yellen, said:
``Implementation of the Volcker rule is, frankly, complex. . . .''
President Obama's Federal Reserve Governor Tarullo said: ``Several
years of experience have convinced me that . . . the Volcker rule is
too complicated.''
President Obama's former Comptroller of the Currency said the Volcker
rule ``has been one of the most complex rulemakings I can remember
being involved in.''
That is why we need to simplify it.
Mr. Speaker, I am now very happy to yield 5 minutes to the gentleman
from Arkansas (Mr. Hill), the bill's sponsor, one of the hardest
working and most knowledgeable members on our committee.
{time} 0930
Mr. HILL. Mr. Speaker, I thank the chairman, and I appreciate the
chairman's leadership in bringing this bill to the floor today.
I think the American people should be very pleased that this bill is
coming to the floor in the form that it is, because we are doing two
things here, Mr. Speaker, that I hear about from constituents all the
time in terms of the way Congress should work.
First, the Dodd-Frank Act was passed 8 years ago this July and has
been scrutinized by Congresses since that time on how it can be
improved. What are the implications of it? What are the unintended
consequences of it?
No section of this bill was talked about more than section 619, the
Volcker rule. So we are evaluating it, and we are bringing today a
bipartisan solution to something that regulators say is a problem,
bankers say is a problem, and our consumers and businesses have had the
unintended consequences of being hurt by, because it has not allowed
our capital markets to function efficiently.
So, first, Dodd-Frank is subject to review after it was passed. That
is something our constituents want. We know no law is perfect when it
is passed. It is not a piece of the true cross discovered by St. Helena
in Jerusalem. It is not part of the Rosetta Stone. It is subject to the
scrutiny of the people--our people--the American people.
Secondly, people tell me all the time: Why can't you be more
bipartisan?
So, Mr. Speaker, this is people's exhibit A of bipartisanship.
The Financial CHOICE Act that this House passed last year repealed
the Volcker rule. We believe it harms the capital market system of this
country. We believe it was an overreaction to the financial crisis.
We had members of the Obama administration who said that proprietary
trading didn't even contribute to the financial crisis. But set that
issue aside. We proposed repeal. Over in the United States Senate, they
passed the bill with two-thirds of the Senate, Mr. Speaker, to say that
the Volcker rule is not perfect.
Section 619 is not right, and they exempt community banks under $10
billion that don't have trading activity. They exempt them completely
in the U.S. Senate bill passed with two-thirds of the Senate. I think
all Americans know that two-thirds of the Senate agreeing on something
is shocking. They can't even agree that there are 24 hours in a day.
So this bill represents an improvement. This bill represents
bipartisanship. With my friend, Dr. Foster, we have worked from the yin
of full repeal to the Senate-exempt community banks. We have identical
language to exempt community banks in this bill, Mr. Speaker. That is
why we got a 50-0 vote in our committee. It is common sense.
But we add one feature that we think improves that Senate language,
and that is the heart of what is changed in this bill and the heart of
what Dr. Foster worked on, which is, how do we harmonize the
interpretation of this 1,000-page complex rule that our Federal Reserve
bank presidents don't understand and our current chairman said that
trading desks had to have a Ouija board to figure out how to do a
trade? So we want a standard, harmonized interpretation of this rule,
and that is what Dr. Foster and I propose today.
They have tried other ways. We have an Interagency Working Group.
They sit around, drink coffee, and figure out ways to harmonize stuff.
But they have failed. There were hundreds of questions submitted: How
do we interpret this rule? They could come up with 21 answers, Mr.
Speaker, out of hundreds submitted.
So for that reason, Dr. Foster and I suggest that the Federal Reserve
system be first among equals in interpreting this complex rule. Why?
Because they oversee all of the bank holding companies in the country,
the most complex institutions in the country. In my view, that is what
we need to do.
We are bipartisan. We have compromised. We have brought both sides
together. We have improved the bill. Like our chairman, I wish it were
repealed, but that is not possible right now. So we take a step forward
to make it a better rule that provides more certainty for market
makers.
If market makers have more certainty, Mr. Speaker, broker-dealers
under $10 billion or over $10 billion will have a more clear compliance
regime. Our towns and municipalities that require in their municipal
bonds having market makers and trading will get better prices, which
means our water and sewer systems are going to cost less when it comes
to the net interest cost. That is what we are trying to do, is improve
our capital markets and let our companies have more market makers.
So, Mr. Speaker, I urge my colleagues to support this bill. I thank
Dr. Foster for his support, and I thank the chairman for bringing it to
the floor.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield 3\1/2\ minutes
to the gentleman from Illinois (Mr. Foster), who is a member of the
Financial Services Committee.
Mr. FOSTER. Mr. Speaker, I thank Ranking Member Waters for yielding
me the time and for her commitment to thoughtful debate in our caucus
to get the best results for the people that we represent.
I thank Congressman Hill for working with me and our staff for months
to craft the bipartisan bill that you see on the floor today.
When I first entered Congress, the Great Recession required an
emergency response for lawmakers to save the economy from collapse, and
then it required a thoughtful response to make sure that we would have
an economy that would remain stable and work for everyone.
[[Page H3218]]
That is why I worked hard to draft the Dodd-Frank Wall Street Reform
and Consumer Protection Act, and I am proud that it has succeeded in
creating a more stable and better capitalized financial system so that
hardworking families should never have to endure a similar financial
crisis. The balance has generally been good between reining in risk and
allowing financial services firms to play their necessary role in our
economy.
We have to constantly monitor for new risks and ways that regulation
may unintentionally reduce liquidity or restrict access to capital. But
first and foremost, we need to fight to preserve the substantive pieces
that we got right and to build on its success with improvements to the
law. That includes the Volcker rule, a crucial aspect of protecting the
system. The current arrangement uses a committee of five agencies--the
Fed, OCC, FDIC, SEC, and CFTC--to write and update the rule.
During Volcker rulemaking, each regulator on the committee has an
effective veto over any proposed policy. I spoke with former regulators
who were involved in that rulemaking process and came to understand
that the committee decision often formed around the weakest regulatory
position, which is not good. The veto of each regulator also applies to
interpreted guidance, which makes it very hard for either industry or
watchdog groups to get a straight answer on what the details of the
Volcker rule actually are.
H.R. 4790 would strengthen Dodd-Frank by making regulatory practices
more efficient and clear. The bill, including my amendment, would make
the Federal Reserve the sole rulemaking agency for the Volcker rule,
identify the regulator primarily responsible for oversight of an
institution, and provide relief to community banks who are not going to
threaten our economy by setting up a massive proprietary trading desk.
Consolidated rulemaking at the Fed will also streamline the process
for updating the Volcker rule to new market conditions that may create
new threats. As markets change, we need a single nimble regulator to
respond by amending the rule and providing an interpretation for new
conditions.
Identifying the single regulator responsible for Volcker oversight of
an institution ensures consistent implementation and enforcement. This
will be the Fed for a bank holding company, the OCC for a national
bank, the FDIC for a federally insured State-chartered bank, the SEC
for a broker-dealer, and the CFTC for a swap dealer. Importantly, the
FDIC retains its backup examination authority for banks to protect the
Deposit Insurance Fund with respect to all insured institutions.
Exempting small community banks will relieve a significant compliance
cost that is unnecessary because few of these banks have any interest
in proprietary trading. This would also allow the regulators to focus
on the largest banks which are the only ones capable of having large
trading operations. These large banks hold 82 percent of all deposits
and are the potential source of nearly all systemic risk.
The bill limits the exemption to banks with less than $10 billion in
assets and less than 5 percent of those assets being in trading assets.
The SPEAKER pro tempore (Mr. Lance). The time of the gentleman has
expired.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield the gentleman
from Illinois an additional 30 seconds.
Mr. FOSTER. Mr. Speaker, this 5 percent limitation means that any
well-capitalized small bank that decides to invest in tradeable assets
could take 100 percent losses on its trading positions without becoming
insolvent and without threatening the Deposit Insurance Fund. So there
is no gambling with taxpayer funds involved here.
Mr. Speaker, I urge you to support a stronger Volcker rule by
bringing greater efficiency and transparency to the policy formulation
and greater consistency to implementation and enforcement.
I thank, again, the ranking member for yielding me the time, and I
urge a ``yes'' vote on the final passage of H.R. 4790, the Volcker Rule
Regulatory Harmonization Act.
Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from
Michigan (Mr. Huizenga), who is the chairman of the Capital Markets,
Securities, and Investment Subcommittee.
Mr. HUIZENGA. Mr. Speaker, the ranking member seems as if she would
like to have a conversation about housing and prices. I am happy to do
that--I am a former realtor and builder--just not right now.
Today, we are here to talk about H.R. 4790, the Volcker Rule
Regulatory Harmonization Act, introduced by my good friend and
colleague, Mr. Hill.
H.R. 4790 would streamline the regulatory authority over the Volcker
rule by granting the Federal Reserve the exclusive primary authority,
while requiring all of the other agencies to yet do their job as
prescribed.
This was really about proprietary trading. Because of the key role
that market making plays in ensuring deep, liquid capital markets, the
framers of the Volcker rule sought to exempt market-making activities
from the coverage of its prohibition on proprietary trading.
There is just one problem: The line between impermissible
``proprietary trading'' and permissible ``market making'' is virtually
impossible to draw.
To add insult to injury, the framers of the Volcker rule unartfully
conferred responsibility for both implementing and enforcing the rule
on five different Federal financial regulators, all of which have
different mandates and regulatory philosophies: the Federal Reserve,
FDIC, OCC, SEC, and the CFTC. It is an alphabet soup of regulators.
With each regulator having different statutory mandates and
regulatory missions, is it any surprise that these five agencies have
failed to reach a consensus on the regulation to implement the Volcker
rule's vague legislative language?
Let me give you another example. This is a little like driving down
an unmarked section of the road where the State police, the Department
of Transportation, the local police, the parking attendant, and the FBI
have all been told that they have primary enforcement responsibilities
for the speed limit. It just doesn't make sense. As a result, banks are
getting out of the market-making business for fear of running afoul of
the Volcker rule. This is a great detriment to the U.S. capital
markets.
The real-world implications of the Volcker rule have been higher
borrowing costs for job creators, smaller investment returns for
hardworking families, and less economic activity overall because of
further regulatory restraints placed on already reduced liquidity
margins in key fixed-income markets, including the corporate bond
market.
So, needless to say, from its inception, the Volcker rule has been a
solution in search of a problem. It seeks to address activities that
had nothing to do with the financial crisis, and its practical effect
has been to undermine financial stability rather than to preserve it.
H.R. 4790 is a much-needed first step to addressing the numerous
unintended and negative consequences of the Volcker rule. This
bipartisan bill, as has been pointed out, streamlines the rulemaking
authority of the Federal Reserve. It consolidates examination and
enforcement authority into a single primary regulator.
This legislative measure makes important and sensible changes to
ensure much-needed regulatory clarity and reduces burdensome compliance
costs.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. HENSARLING. Mr. Speaker, I yield the gentleman from Michigan an
additional 30 seconds.
Mr. HUIZENGA. Mr. Speaker, despite the hyperbole you are hearing from
the ranking member, nothing in this bill grants the Federal Reserve the
ability to repeal the Volcker rule--nothing. Additionally, the other
regulators, that alphabet soup of regulators, are still required to
enforce the law.
Everyone deserves to have clarity and understanding of what the rules
of the road are, and that is what this bill is trying to do.
Mr. Speaker, I urge my colleagues to vote ``yes'' on H.R. 4790.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such
time as I may consume.
Mr. Speaker, when the gentleman from Michigan started his remarks, he
[[Page H3219]]
accused me of wanting to talk about housing. He is absolutely correct.
I want to talk about housing. I believe that if we really understood
the needs of our constituents all over this country, instead of talking
about megabanks and how we can give them whatever they want in order to
make more profits, we should be talking about housing. We should be
talking about housing needs in this country.
As a matter of fact, I have said to the chairman more than once that
I really would like to have a hearing on homelessness because
homelessness is exploding all over the country. In the city of Los
Angeles, we have probably over 53,000 homeless people every night
without a place to lay their heads.
Oh, yes, we should be talking about housing. You cannot separate
trading from housing in the way that maybe some would attempt to do:
Oh, this is about Volcker; it has nothing to do with housing.
Oh, yes, it does.
{time} 0945
Because, instead of this risky trading that the banks are doing, they
should be investing in our communities and providing for affordable
housing.
And let me just tell you, African-American homeownership today is as
low as it was when housing discrimination was legal. There is not a
single county in the United States with sufficient affordable housing.
So, yes, we should be talking about housing, and thank you for
bringing it to my attention. Thank you for accusing me of wanting to
talk about housing.
Last year our Nation's banks reported $164.8 billion in profit. Had
it not been for the Republicans' new tax law which required them to
take a one-time charge, the FDIC estimates that the banks would have
profited to the tune of $183.1 billion, which is an all-time high and
an increase of 7.2 percent from 2016 and a 26 percent increase from
2006.
So I think it is a little hard to argue that banks don't have enough
money to lend, but let's look at what they did with that money.
The Wall Street megabanks returned a lot of that money to their
shareholders in the form of dividends and stock buybacks. For example,
in June 2017, J.P. Morgan announced a stock repurchase program of up to
$19.4 billion, its biggest buyback since the financial crisis.
Citigroup also announced its largest ever stock buyback program, worth
up to $15.6 billion, and doubled its dividend.
The Wall Street megabanks also handsomely rewarded their CEOs with
some of the biggest paydays since 2006. Five Wall Street banks,
combined, paid their CEOs a total compensation of $126 million, the
highest amount since before the financial crisis. Each chief of the
banks--which includes Bank of America, J.P. Morgan, and Morgan
Stanley--received an average $25.3 million for their work, and that was
up 17 percent from 2016.
Mr. Speaker, we listen to Chairman Hensarling's stories. He shares a
lot of stories with us that he receives from his constituents about
problems they are having receiving car loans or a mortgage. And I
agree, we should be doing more to expand access to credit for
consumers; but what I do not agree with is the Republican argument
that, if we only repealed bank regulations, then all of a sudden those
individuals would receive the car loans and the mortgages that they
currently cannot.
Banks are raking in money hand over fist, and they could use that
money now to lend to creditworthy borrowers instead of paying millions
of dollars in bonuses to their CEOs. Let's be clear about what is
really going on. No amount of regulatory relief will cure Wall Street
greed.
Mr. Speaker, I reserve the balance of my time.
Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentleman from
Wisconsin (Mr. Duffy), chairman of the Subcommittee on Housing and
Insurance.
Mr. DUFFY. Mr. Speaker, I thank the chairman for yielding time to me.
Mr. Speaker, I want to congratulate Mr. Hill on putting together such
a great bill, the Volcker Rule Regulatory Harmonization Act, a bill
that you might not know from this conversation has wide bipartisan
support in our committee, which has a lot of different views, left and
right. It passed 50-10--passed 50-10.
I want to talk about the Volcker rule in a second, but my good friend
across the aisle--I call her a friend--is talking about big banks and
all the bad things they are doing. Listen, when banks do well, our
communities do well. When banks don't do well, we see crises spread
across America, and people get hurt.
When we talk about some of the biggest banks and making sure they
have strong and stiff regulation, I would agree with the ranking
member; but when we talk about their stock prices going up, we have got
to ask: Who owns J.P. Morgan? Who owns Wells Fargo? Who owns the
biggest banks in America?
The people who President Trump had on his stage yesterday in the Rose
Garden: It is truck drivers. It is the Wisconsin teachers. It is the
people who work across this country who put money in their 401(k)s that
own all of these stocks. And when those stock prices rise, so, too, do
the values of the 401(k)s, because they own those American businesses.
When you look at the Volcker rule and this ham-handed way in which it
was put together and you are starting to reduce marketmaking in an
effort to get away from proprietary trading, what you find is more
volatility. And what you see then is the price of mortgages actually go
up.
Having markets that actually work is a way to get the most efficient
pricing to homeowners, which is what we are trying to do here, which is
why so many Democrats voted for a bill like this from Mr. Hill.
I know this is not a housing conversation, but it is true that there
are a lot more homeless people in America. We were devastated by the
Obama economy.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. HENSARLING. Mr. Speaker, I yield the gentleman from Wisconsin an
additional 30 seconds.
Mr. DUFFY. Mr. Speaker, I think we can't deny the fact that, when you
want to buy a house, you have to have a salary. You have to have a job.
As the President likes to point out, the unemployment rate for the
African-American and the Hispanic communities, of which my wife is one,
is at all-time lows. They have jobs. And when you have a job, you have
a salary. When you have a salary, you can buy a house.
What I don't want to do is what we did before the 2008 crisis, which
is give mortgages to people who can't afford to pay them, and then they
lose those homes in foreclosure and their lives are devastated. We want
to make loans to people who can afford to pay the mortgage and keep
their home. Now is the time under a Trump economy where people have
jobs, income, and can now afford to buy a home.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such
time as I may consume.
Mr. Speaker, this is absolutely amazing. We had the gentleman earlier
who said this is not the time to talk about housing, and then we have
the gentleman from Wisconsin who says, when the banks do well, our
constituents do well.
The banks are making millions of dollars; the CEOs are making
millions of dollars; and they have bank tellers and people who work who
are not even making $15 an hour. We can't even get a minimum wage
increase, Federal minimum wage increase for our constituents, and many
of them are working in these megabanks where the CEOs are walking away
every year with millions of dollars in pay.
So these statements, when banks do well, everybody does well, I wish
my good friend would reexamine that statement because I think, when he
thinks about it, he might want to retract it and take that back.
``Certainly, we have to do a better job ring-fencing, fire-walling--
whatever metaphor you want to use--between an insured depository
institution and a noninsured investment bank.'' That is a quote from
Chairman Jeb Hensarling, March 2013. That appeared in The Wall Street
Journal.
And this is just what the Volcker rule does.
``If you're a bank and you want to operate like some nonbank entity
like a hedge fund, then don't be a bank. Don't let banks use their
customers' money
[[Page H3220]]
to do anything other than traditional banking.'' Again, I repeat, that
is what Speaker Paul Ryan said in May 2012 in a townhall meeting.
``I do support the Volcker rule. I think the concept of proprietary
trading does not belong in banks with FDIC insurance.'' That is a quote
from Treasury Secretary Steve Mnuchin, January 2017, during the Senate
confirmation hearings.
Another quote: ``I think the Volcker rule is very important and it is
good. I think the Volcker rule is good. Banks should not be a last
resort to sell securities. Banks should not have prop desks buying
them.''
That was Carl Icahn, the hedge fund manager and currently special
adviser to President Trump on regulatory reform during a 2015
conference.
Another quote: ``Proprietary trading played a big role in
manufacturing the CDOs and other instruments that were at the heart of
the financial crisis. . . . If firms weren't able to buy up the parts
of these deals that wouldn't sell . . . the game would have stopped a
lot sooner.''
This is a quote by Michael Madden, a managing director of the
investment firm BlackEagle Partners and a former Lehman executive.
We have more quotes. Here is one: ``The industry should be
compartmentalized so as to limit the propagation of failures and also
to preserve cultural boundaries.'' That is a quote by John Reed, the
former Citigroup chairman, in a Senate testimony, February 2010.
Further quoting: ``A strong Volcker rule is one of the most important
provisions to prevent `too big to fail' financial institutions, stop
conflicts of interest, and support credit in our economy. . . . Failure
to comply should be severely punished.'' And this is what Reed said in
a letter to regulators, February 2012.
Again, in looking at all of these quotes, we find that there is one
from former Democratic and Republican Secretaries of the Treasury W.
Michael Blumenthal, joined by Nicholas Brady, Paul O'Neill, George
Schultz, and John Snow.
This is what they said: ``Banks benefiting from public support by
means of access to the Federal Reserve and FDIC insurance should not
engage in essentially speculative activity unrelated to essential bank
services.'' Again, all of these gentlemen said this in a letter,
reported in The Wall Street Journal, February 2010. This was a letter
to the editor.
And let me just, again, refer to one of the greatest economists in
this country and the former Chair of the FDIC, Paul Volcker. What did
he say?
He said, in essence: The five banking regulatory authorities have now
successfully responded to the provisions of the Dodd-Frank Act by
setting out a comprehensive regulation restricting proprietary trading
by commercial banks in the United States. . . . The agencies have dealt
comprehensively with thousands of particular conceptual and practical
questions raised by affected bankers, by legions of lobbyists, by other
interested parties, and by the general public. . . . The result should
help the process of restoring trust and confidence in commercial
banking institutions. It is, after all, those institutions which
benefit from explicit and implicit public support that we count on to
provide a strong, safe, and effective financial system--Paul Volcker,
December 2013.
``The Volcker rule will make it illegal for firms to use government-
insured money to make speculative bets that threaten the entire
financial system and demand a new era of accountability from CEOs who
must sign off on their firms' practices. Our financial system will be
safer, and the American people are more secure because we fought to
include this protection in the law.'' That was President Obama,
December 2013.
Mr. Speaker, with that, I will reserve the balance of my time.
Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentleman from
Illinois (Mr. Hultgren), who has come to actually speak on H.R. 4790 as
opposed to H.R. red herring, the vice chairman of the Financial
Services Subcommittee on Capital Markets, Securities, and Investments.
Mr. HULTGREN. Mr. Speaker, I first want to thank the hardest working,
most effective chairman in all of Congress; and I also want to thank my
good friend and colleague French Hill for sponsoring this legislation.
I also want to thank my friend and colleague from Illinois, Bill
Foster, for his work on this.
I am also very happy to be a cosponsor of the Volcker Rule Regulatory
Harmonization Act. This legislation strikes a bipartisan balance for
simplifying some of the regulatory burden of the Volcker rule and
provides a clear exemption for community banks.
{time} 1000
The Dodd-Frank Act granted responsibility to five different financial
regulators with implementing and enforcing the Volcker rule: the Fed,
OCC, FDIC, SEC, and CFTC. Every Member of this body knows that it can
be difficult to come to an agreement when you have too many cooks in
the kitchen. Imagine if this were the case for promulgating,
implementing, and enforcing something as complicated as the Volcker
rule.
One Illinois bank, that serves thousands of my constituents,
explained it is this way: ``This overlapping authority with respect to
interpretations and guidance, as well as examinations and supervision,
is inefficient and requires unnecessary time and effort, on the part of
banks as well as regulators, to ensure compliance.''
The Volcker Rule Regulatory Harmonization Act is an artful solution
to dealing with this issue. It grants the Federal Reserve the exclusive
rulemaking authority under section 619 of the Dodd-Frank Act and
provides the sole examination and enforcement authority by an entity's
primary Federal regulator. The bill also addresses the concerns that
community banks have raised with the Volcker rule.
H.R. 4790 exempts banking organizations that do not have or are not
controlled by entities with $10 billion or more in total consolidated
assets and total trading assets or trading liabilities that are more
than 5 percent of total consolidated assets.
Because of the Volcker rule's complexity, even those community banks
that do not conduct any proprietary trading have, nonetheless, had to
incur large costs simply proving what the regulators already know, that
they are not engaged in activities covered by the rule. This is simply
not fair to subject community banks to these costs associated with
this.
Mr. Speaker, I encourage my colleagues to support this legislation.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield 2 minutes to
the gentlewoman from Ohio (Ms. Kaptur), my friend and champion of
consumers.
Ms. KAPTUR. Mr. Speaker, I thank Ranking Member Waters for her
constant leadership to restore prudent banking to this country and rein
in reckless speculation.
When six megabanks in our country control over 75 percent of the
wealth, that is too much power in too few hands. It has become
increasingly clear that the Republican Party is focusing its efforts in
this Congress on the only issue in which the GOP can seem to collect a
consensus: handing out massive giveaways to the fat cats on Wall Street
and their 1 percent buddies.
The number of Dodd-Frank rollbacks we have seen this year alone is a
blizzard. Now, this bill, the Volcker rule repeal, is just that,
another Dodd-Frank rollback wrapped and tied with a big bow for giants
Goldman Sachs and J.P. Morgan and their like.
The bill rolls back key prudent banking protections put into place to
prevent another financial meltdown and protect hardworking Americans
from losing their wealth. You know, not one of those buzzards went to
jail.
The bill allows for a blanket exemption for the Volcker rule for
banks with less than $10 billion in assets. Oh, I feel so sorry for
them. They only have $10 billion. There is no logic behind allowing
banks of a certain size to engage in the exact type of speculative--
risky speculation that contributed to the financial crisis that we are
still digging our way out of.
Don't we remember Countrywide? It wasn't so long ago. You know, my
unflagging dedication to leveling the playing field and building up our
prudent lenders, community banks, and credit unions is the reason I
stand to object to this legislation today. We can't allow such
foundational building blocks of our communities to be wrecked again
into the mangled progeny of the big six, and that is just what
[[Page H3221]]
my colleagues on the Republican side are about.
The SPEAKER pro tempore. The time of the gentlewoman has expired.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield an additional
30 seconds to the gentlewoman from Ohio.
Ms. KAPTUR. Mr. Speaker, on top of this blanket exemption, the bill
also hands complete rulemaking power to the Fed rather than having
checks and balances inside the executive branch, paving the way to
completely gut the Volcker rule.
You know, Fed Chair, formerly Paul Volcker, had said: ``I know from
my long experience in banking and savings and loan regulation that
plausibly small loopholes can be `gamed' and exploited with unfortunate
consequences.''
Again I say: Remember Countrywide?
African Americans lost half their accumulated wealth since the
founding of the Republic, Latinos a third, and everybody else a fifth.
You know what, it is time to keep prudent banking elevated and curb the
speculators.
Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentleman from
North Carolina (Mr. Pittenger), who is familiar with the eight-page
bill and knows that H.R. 4790 does not repeal the Volcker rule. He
happens to be the vice chairman of the Financial Services Subcommittee
on Terrorism and Illicit Finance.
Mr. PITTENGER. Mr. Speaker, I thank the chairman for his exceptional
leadership on this important consideration and legislation.
Mr. Speaker, I rise today in strong support of the gentleman from
Arkansas, as well and the whip of the Financial Services Committee, for
his work on H.R. 4790, the Volcker Rule Regulatory Harmonization Act.
Mr. Hill's legislation streamlines the rulemaking process by granting
the Federal Reserve sole authority to make exemption determinations
under the Volcker rule. This simplification is a vital change from the
confusion and the regulatory inconsistencies of the current Volcker
rule by resolving the problem of having five different regulators
weighing in on the same issue. This bill also exempts community banks
under $10 billion in assets from the rule.
Mr. Speaker, I want to note that, according to the FDIC, community
banks with less than $10 billion in assets represent 92 percent of the
insured institutions. Now, more than ever, actions like this need to be
taken to provide relief to community banks and smaller financial
institutions.
Look no further than my State in North Carolina, which has lost 50
percent of its banks since this financial crisis and the inception of
the Dodd-Frank bill. Mr. Speaker, I thank Mr. Hill for his work on this
bipartisan piece of legislation. It is long past time that we provide
commonsense reforms to overly complex regulations passed under the
Dodd-Frank Act. This is why I strongly urge my colleagues to join me in
voting ``yes'' on H.R. 4790.
Ms. MAXINE WATERS of California. Mr. Speaker, I reserve the balance
of my time.
Mr. HENSARLING. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from Texas (Mr. Williams), the vice chairman of the Financial Services
Subcommittee on Monetary Policy and Trade.
Mr. WILLIAMS. Mr. Speaker, I rise today in support of H.R. 4790, the
Volcker Rule Regulatory Harmonization Act. I appreciate the gentleman
from Arkansas (Mr. Hill) for his leadership on this issue.
At over 930 pages, section 619 of Dodd-Frank, otherwise known as the
Volcker rule, is as lengthy as it is complex and confusing. The Volcker
rule is framed as a solution to a problem that never existed in the
first place. Right now there are five different agencies responsible
for overseeing the implementation of the Volcker rule. These five
agencies all have different legal mandates and regulatory missions,
which have led to duplicate and concurrent reviews into U.S. banks.
In the 25th District of Texas, community banks are struggling to get
by and wonder why they have five different regulators knocking on their
doors about the same issue. Only in Washington would that kind of
backwards thinking be rewarded.
H.R. 4790 would streamline regulatory authority over the Volcker rule
by giving the Federal Reserve exclusive rulemaking authority. In other
words, banks won't have five different regulators coming to them about
the same regulation. As a result, Main Street will be able to breathe
again.
Mr. Speaker, the bottom line is this: This is a commonsense way of
governing that we should see more of in this Chamber. I am proud to
support this piece of legislation that passed the committee with wide
bipartisan support just last month, and I encourage the whole House to
vote in favor of it today.
Now, we have had a lot of quotes. I have a quote. ``Business is good
and business is getting better. H.R. 4790 moves our economy to new
levels like we have never seen in years. Roger Williams, small business
owner. Thank you very much.''
Ms. MAXINE WATERS of California. Mr. Speaker, may I inquire, how many
more speakers does Mr. Hensarling have?
Mr. HENSARLING. Mr. Speaker, the majority has three more speakers.
Ms. MAXINE WATERS of California. Mr. Speaker, I reserve the balance
of my time.
Mr. HENSARLING. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from Minnesota (Mr. Emmer), another hardworking member of the Financial
Services Committee.
Mr. EMMER. Mr. Speaker, I rise today in support of H.R. 4790, which
makes important changes to our financial regulatory system that will
provide clarity and consistency for our community financial
institutions.
I want to thank my colleague from Arkansas for bringing this
important legislation forward. The Volcker rule, a creation of the
Dodd-Frank Act, sought to prohibit reckless trading and investment
strategies to protect consumers. Instead, it has led to yet another
overly complex one-size-fits-all regulatory regime that adds additional
pressure on our already overregulated community banks.
The complexities of this rule and its unintended consequences have
been acknowledged by the current and prior administration as well as by
Members on both sides of the aisle. The mere fact that five different
agencies: the Fed; the FDIC; Office of the Comptroller of the Currency,
the OCC; Securities and Exchange Commission, the SEC; and Commodity
Futures Trading Commission, the CFTC, are responsible for implementing
and enforcing one rule should tell the American people everything they
need to know about how fragmented and confusing the Volcker rule can
be.
That is why I am pleased to see H.R. 4790, the Volcker Rule
Regulatory Harmonization Act come before the House today to provide an
exemption for our small community financial institutions and to
streamline the regulatory authority of the Volcker rule.
Mr. Speaker, this bill will free up banks on Main Street Minnesota
and in towns all across the country, allowing them to spend more time
lending to consumers and small businesses and less time wondering if
the heavy hand of the Federal Government is going to come crashing down
on him.
Again, I thank Mr. Hill for his hard work on this issue and urge my
colleagues to vote ``yes'' on H.R. 4790.
Ms. MAXINE WATERS of California. Mr. Speaker, I continue to reserve
the balance of my time.
Mr. HENSARLING. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from Georgia (Mr. Loudermilk), a great member of the Financial Services
Committee.
Mr. LOUDERMILK. Mr. Speaker, I want to thank the gentleman from Texas
(Mr. Hensarling) for yielding time and the gentleman from Arkansas (Mr.
Hill) for bringing this bill, a very important bill, to the floor for a
vote today. Mr. Hill's bill will simplify and streamline one of the
most complicated regulations from Dodd-Frank, the Volcker rule.
The Volcker rule is intended to prevent banks from engaging in risky
investments that do not benefit their customers, also known as
proprietary trading. There are currently five Federal regulatory
agencies implementing the Volcker rule. This has caused overlap,
duplication, and confusion among regulated companies.
The bill on the floor today will ensure that one Federal agency, the
Federal Reserve, is responsible for writing
[[Page H3222]]
this regulation and that each bank's primary regulator will have the
sole enforcement authority for that bank. This will streamline and
simplify this overly complicated rule so financial institutions can
spend more of their time making loans to consumers and businesses and
less time on regulatory compliance.
This bill will also fully exempt our small community banks that
maintain less than $10 billion in assets from the Volcker rule rather
than requiring them to prove a negative.
There are currently 176 banks headquartered in my home State of
Georgia, and all but three of them have less than $10 billion in
assets. This bill will go a long way toward relieving small community
banks in Georgia from unnecessary, complicated, and burdensome
regulation.
This bipartisan bill passed out of committee by a vote of 50-10 with
the support of all the Republicans and the majority of the Democrats. I
urge all my colleagues to support this bill.
Ms. MAXINE WATERS of California. Mr. Speaker, I continue to reserve
the balance of my time.
Mr. HENSARLING. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from Ohio (Mr. Davidson), a good member of the Financial Services
Committee.
Mr. DAVIDSON. Mr. Speaker, I rise on behalf of Ohio constituents who
have suffered reduced access to the banking system due to the loss of
community financial institutions in Ohio's Eighth District.
Like many things in Dodd-Frank that were intended to do good and
protect consumers, the Volcker rule is doing the exact opposite. The
Volcker rule was designed to protect depositors from having their
deposits placed at risk through proprietary trading. It was not
designed to discourage other forms of capital from flowing into our
banking system, from increasing competition, or from lowering prices
for a broad swath of customers.
This pragmatic, bipartisan compromise on Volcker is a great step
forward in enabling community banks to reach their compliance costs and
allow them to deploy more capital in the communities that serve.
My hope is we can move forward and pursue more commonsense solutions
like this, especially to help underserved communities where we have
seen local banking services dry up. I encourage support for this bill.
{time} 1015
Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself the
balance of my time to close.
This is the third bill that the majority has put on the House floor
this week that is a harmful giveaway to the big banks. I could just
list you all of the deregulatory bills that they have been bringing
forward, but, today, the bill we are considering, H.R. 4790, would
threaten the Volcker rule, which prevents banks from gambling with
taxpayer money. As we have discussed, the Volcker rule is a key
component of Wall Street reform and has prevented risky, speculative
behavior by Wall Street and made our economy safer. It must not be
compromised.
It seems the Republicans have not learned the lessons of the
financial crisis at all. They are working every day to reverse critical
Dodd-Frank reforms and to reopen the door to risky and harmful
practices that led our Nation to economic catastrophe, so I oppose this
bill.
I do not want our Members to be tricked or fooled talking about
community banks. This is not about community banks. This is about the
megabanks. They always use the community banks to lead on some of these
arguments so that people will think that they are doing something for
community banks.
Mr. Speaker, I yield back the balance of my time.
Mr. HENSARLING. Mr. Speaker, may I inquire how much time I have
remaining.
The SPEAKER pro tempore (Mr. Byrne). The gentleman from Texas has 3
minutes remaining.
Mr. HENSARLING. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, as I listened very carefully to my friend and ranking
member describe this parade of horribles that is going to befall our
economy if H.R. 4790 is enacted, I would gently remind her that a
majority of her own Members supported it. So all of these accusations
that she has made against the majority party, I hope, and believe, she
has, obviously, foisted upon the majority of her own Members who
clearly do not support her in what she is attempting to do.
In addition, Mr. Speaker, I would remind all Members, contrary to the
Volcker rule, that weighs in at almost 1,000 pages, H.R. 4790 weighs in
at 8 pages. If you read the bill, you will discover that it does not
repeal the Volcker rule. Again, I don't know what bill the ranking
member was debating, but it is not H.R. 4790.
Now, Mr. Speaker, just think about it for a second. Paying your
taxes--tax day is coming up--is not a pleasant time of year. And as
unpleasant as that time is, think if you had to file your taxes with
five different Federal agencies. Think about the fact that if you had a
question about your taxes, that you had to call the Internal Revenue
Service, you had to call the Department of Labor, you had to call the
EPA, and you had to call the CFPB. What if you had five different
agencies interpreting the Internal Revenue Code, all enforcing it in
different ways? That would take one of the worst days of the year and
compound it mightily.
What the gentleman from Arkansas is trying to do on the majority
side, and what the gentleman from Illinois is trying to do on minority
side, is say: If we are going to have a Volcker rule--one of the most
complicated, complex rules ever devised by the mind of man--maybe we
ought to have one agency interpret it and one agency enforce it.
Why do we do that, Mr. Speaker?
We do that so that capital can be available to the people I spoke
about in my opening statement. So that Jeff and Arlis can have capital
to expand their small businesses on Main Street. That is what this is
all about--so that our small businesses can thrive, so that the people
who want to own a home can thrive, and so that this economy can grow.
This is commonsense. It is why it is a strong, bipartisan measure--
another strong, bipartisan measure that, unfortunately, our ranking
member chooses not to partake in. And it is one of the reasons why,
unfortunately, Mr. Speaker, if we listen to that side of the aisle--or
at least a particular voice--we will continue to have bad economic
growth. We need good economic growth for all of the American people.
Mr. Speaker, I urge all Members to support H.R. 4790, and I yield
back the balance of my time.
The SPEAKER pro tempore. All time for debate has expired.
Pursuant to House Resolution 811, the previous question is ordered on
the bill, as amended.
The question is on the engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
The SPEAKER pro tempore. The question is on the passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. HENSARLING. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The vote was taken by electronic device, and there were--yeas 300,
nays 104, not voting 25, as follows:
[Roll No. 139]
YEAS--300
Abraham
Adams
Aderholt
Aguilar
Allen
Amash
Amodei
Arrington
Babin
Bacon
Banks (IN)
Barletta
Barr
Barragan
Barton
Beatty
Bera
Bergman
Beyer
Biggs
Bilirakis
Bishop (MI)
Bishop (UT)
Black
Blackburn
Blum
Blunt Rochester
Bost
Boyle, Brendan F.
Brady (TX)
Brat
Brooks (AL)
Brooks (IN)
Brown (MD)
Brownley (CA)
Bucshon
Budd
Burgess
Butterfield
Byrne
Calvert
Carbajal
Cardenas
Carter (GA)
Carter (TX)
Chabot
Cheney
Clarke (NY)
Clay
Cleaver
Clyburn
Coffman
Cole
Collins (GA)
Collins (NY)
Comer
Comstock
Conaway
Connolly
Cook
Cooper
Correa
Costa
Costello (PA)
Cramer
Crawford
Cuellar
Culberson
Curbelo (FL)
Curtis
Davidson
Davis (CA)
Davis, Rodney
Delaney
DelBene
Denham
Dent
DeSantis
DesJarlais
Diaz-Balart
Donovan
Duffy
Duncan (SC)
Duncan (TN)
Dunn
Emmer
Estes (KS)
Esty (CT)
Evans
[[Page H3223]]
Faso
Ferguson
Fitzpatrick
Fleischmann
Flores
Fortenberry
Foster
Foxx
Frelinghuysen
Fudge
Gaetz
Gallagher
Garrett
Gianforte
Gibbs
Gohmert
Gonzalez (TX)
Goodlatte
Gottheimer
Gowdy
Granger
Graves (GA)
Graves (LA)
Graves (MO)
Green, Gene
Griffith
Grothman
Guthrie
Hanabusa
Handel
Harper
Harris
Hartzler
Heck
Hensarling
Herrera Beutler
Hice, Jody B.
Higgins (LA)
Hill
Himes
Holding
Hollingsworth
Hoyer
Hudson
Huizenga
Hultgren
Hunter
Hurd
Issa
Jackson Lee
Jeffries
Jenkins (KS)
Johnson (GA)
Johnson (OH)
Johnson, E. B.
Johnson, Sam
Jordan
Joyce (OH)
Katko
Kelly (IL)
Kelly (MS)
Kelly (PA)
Kilmer
Kind
King (IA)
King (NY)
Kinzinger
Knight
Kuster (NH)
Kustoff (TN)
Labrador
LaHood
LaMalfa
Lamb
Lamborn
Lance
Larsen (WA)
Latta
Lawrence
Lawson (FL)
Lewis (MN)
LoBiondo
Loebsack
Long
Loudermilk
Love
Lucas
Luetkemeyer
Lujan Grisham, M.
MacArthur
Maloney, Sean
Marchant
Marino
Marshall
Mast
McCarthy
McCaul
McClintock
McEachin
McHenry
McKinley
McMorris Rodgers
McSally
Meadows
Meehan
Meeks
Meng
Messer
Mitchell
Moolenaar
Mooney (WV)
Moulton
Mullin
Murphy (FL)
Newhouse
Norman
Nunes
O'Halleran
O'Rourke
Olson
Palazzo
Palmer
Panetta
Paulsen
Pearce
Perlmutter
Perry
Peters
Peterson
Pittenger
Poe (TX)
Poliquin
Posey
Quigley
Ratcliffe
Reed
Reichert
Renacci
Rice (NY)
Richmond
Roby
Roe (TN)
Rogers (AL)
Rogers (KY)
Rohrabacher
Rokita
Rooney, Francis
Rooney, Thomas J.
Ros-Lehtinen
Rosen
Roskam
Ross
Rothfus
Rouzer
Royce (CA)
Ruppersberger
Russell
Rutherford
Ryan (OH)
Sanford
Scalise
Schneider
Schweikert
Scott, Austin
Sensenbrenner
Sessions
Sherman
Shimkus
Shuster
Sinema
Smith (MO)
Smith (NE)
Smith (NJ)
Smucker
Stefanik
Stewart
Stivers
Suozzi
Taylor
Tenney
Thompson (MS)
Thompson (PA)
Thornberry
Trott
Turner
Upton
Valadao
Vargas
Veasey
Vela
Wagner
Walberg
Walden
Walorski
Walters, Mimi
Wasserman Schultz
Weber (TX)
Webster (FL)
Wenstrup
Westerman
Williams
Wilson (FL)
Wilson (SC)
Wittman
Womack
Woodall
Yoder
Yoho
Young (AK)
Young (IA)
Zeldin
NAYS--104
Blumenauer
Bonamici
Capuano
Carson (IN)
Cartwright
Castor (FL)
Castro (TX)
Chu, Judy
Cicilline
Clark (MA)
Cohen
Courtney
Crist
Crowley
Cummings
Davis, Danny
DeFazio
DeGette
DeLauro
Demings
DeSaulnier
Deutch
Doggett
Doyle, Michael F.
Ellison
Engel
Eshoo
Espaillat
Gabbard
Gallego
Garamendi
Gomez
Green, Al
Grijalva
Gutierrez
Hastings
Higgins (NY)
Huffman
Jayapal
Jones
Kaptur
Keating
Kennedy
Khanna
Kihuen
Kildee
Krishnamoorthi
Langevin
Larson (CT)
Lee
Levin
Lewis (GA)
Lieu, Ted
Lipinski
Lofgren
Lowenthal
Lowey
Lujan, Ben Ray
Lynch
Maloney, Carolyn B.
Matsui
McCollum
McGovern
McNerney
Nadler
Napolitano
Neal
Nolan
Norcross
Pallone
Pascrell
Payne
Pelosi
Pingree
Pocan
Polis
Price (NC)
Raskin
Roybal-Allard
Ruiz
Rush
Sanchez
Sarbanes
Schakowsky
Schiff
Schrader
Scott (VA)
Serrano
Sires
Smith (WA)
Soto
Speier
Swalwell (CA)
Thompson (CA)
Titus
Tonko
Torres
Tsongas
Velazquez
Visclosky
Waters, Maxine
Watson Coleman
Welch
Yarmuth
NOT VOTING--25
Bass
Bishop (GA)
Brady (PA)
Bridenstine
Buchanan
Buck
Bustos
Dingell
Frankel (FL)
Gosar
Jenkins (WV)
Johnson (LA)
Massie
Moore
Noem
Rice (SC)
Scott, David
Sewell (AL)
Shea-Porter
Simpson
Smith (TX)
Takano
Tipton
Walker
Walz
{time} 1047
Messrs. DELANEY, LAWSON of Florida, and Mrs. LAWRENCE changed their
vote from ``nay'' to ``yea.''
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
Stated for:
Mr. DAVID SCOTT of Georgia. Mr. Speaker, during the votes held on
April 13th, 2018, I was away handling important matters related to my
District and attending my 15th Annual Jobs Fair held in Atlanta. If I
had been present I would have voted ``yes'' on H.R. 4790--the Volcker
Rule Regulatory Harmonization Act.
personal explanation
Mr. SIMPSON. Mr. Speaker, I was unable to be present to vote due to
personal reasons. Had I been present, I would have voted ``yea'' on
rollcall No. 138 and ``yea'' on rollcall No. 139.
____________________