[Congressional Record Volume 155, Number 190 (Tuesday, December 15, 2009)]
[Extensions of Remarks]
[Pages E3013-E3014]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         WALL STREET REFORM AND CONSUMER PROTECTION ACT OF 2009

                                 ______
                                 

                               speech of

                         HON. JOHN CONYERS, JR.

                              of michigan

                    in the house of representatives

                      Wednesday, December 9, 2009

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 4173) to 
     provide for financial regulatory reform, to protect consumers 
     and investors, to enhance Federal understanding of insurance 
     issues, to regulate the over-the-counter derivatives markets, 
     and for other purposes:

  Mr. CONYERS. Madam Chair, as the Chairman of the Judiciary Committee, 
I would like to highlight some of the contributions made by our 
Committee to this important legislation. The Committee considered over 
the course of several months a range of legal issues posed by this 
legislation, and held two days of hearings this fall on its bankruptcy 
and antitrust law ramifications--on October 22 in the Subcommittee on 
Commercial and Administrative Law, and on November 17 in the 
Subcommittee on Courts and Competition Policy. Below is a summary of 
some of the more significant provisions added to the legislation, or 
revised in it, at the request of the Committee.


                             Bankruptcy Law

  The bill's new emergency procedures for dealing with financial 
institutions posing imminent toxic danger to our Nation's financial 
system is an exemption from the bankruptcy laws in favor of a 
receivership managed by the Federal Deposit Insurance Corporation 
(FDIC). While appreciative of the need for the government to be able to 
act with dispatch when the stability of the entire financial system is 
in jeopardy, and while respectful of the considered judgment of the 
Treasury Department, the FDIC, and the Financial Services Committee to 
devise an approach outside the Bankruptcy Code for this purpose, the 
Judiciary Committee believes it is important to remain mindful of 
fundamental due process and equitable considerations that are embodied 
in bankruptcy procedure. The Committee has accordingly limited the 
availability and extent of this bankruptcy exemption.
  First, because this departure from well-established bankruptcy 
procedures and protections is justified only in the exigencies of an 
extraordinary emergency threatening stability of the financial system, 
the Judiciary Committee added a new ``purpose'' section to the 
emergency dissolution title to mandate that there be a ``strong 
presumption that resolution under the bankruptcy laws will remain the 
primary method of resolving financial companies, and the authorities 
contained in this subtitle will only be used in the most exigent 
circumstances.'' The Treasury Secretary is required to explain any 
determination that such an extraordinary emergency exists, to the House 
and Senate Judiciary Committees, along with other committees.
  Our Committee also added provisions ensuring that bankruptcy remains 
available as the preferred option. There are new provisions authorizing 
the FDIC, at any time, with the approval of the Treasury Secretary and 
after consultation with the Financial Services Oversight Council, to 
convert an emergency receivership into a case under either chapter 7 or 
chapter 11 of the Bankruptcy Code, while clarifying that doing so will 
not affect any of the FDIC's powers with regard to any bridge financial 
company created under the receivership. Upon its appointment, and 
periodically during the receivership, the FDIC will be required to 
report to the House and Senate Judiciary Committees, as well as to 
other committees, why a receivership is necessary rather than using 
bankruptcy, and the consequences for the rights of other creditors.

[[Page E3014]]

  The Committee also added amendments to the Bankruptcy Code to clarify 
how a case brought by the FDIC proceeds, including authority for the 
FDIC to serve as trustee, with accommodations to certain trustee 
obligations in order to make it feasible for the FDIC to serve.
  The Committee also adapted a number of key protections from the 
Bankruptcy Code into the FDIC's new dissolution procedure. These 
protections include:
  Priority protection for unpaid wages and benefit plan contributions 
for employees of the financial company, who do not have the same 
recourse against their employer as business creditors have against the 
company.
  Protection of collective bargaining agreements from repudiation by 
the FDIC, unless the FDIC determines repudiation is necessary for the 
orderly dissolution of the financial company, taking into consideration 
the cost to taxpayers and financial stability of the U.S.
  Appointment of a consumer privacy advisor to protect the privacy of 
consumers whose personal information is in the possession of the 
financial company.
  The Committee also directed the Government Accountability Office to 
undertake two studies and reports:
  The first is a report in the event a financial company is taken into 
emergency receivership and assets are removed by the FDIC, on the 
extent to which claims against the company for violations of the Truth 
in Lending Act have been satisfied.
  The other is a report on the ``safe harbor'' provisions for 
derivatives, swaps, and securities under federal law, that excludes 
them from bankruptcy and receivership proceedings, on how they have 
affected the ability of businesses to reorganize.


                             Antitrust Law

  One major impetus of this legislation is to address the problem faced 
last year by financial institutions that were deemed ``too big to 
fail.'' The emergency efforts to deal with those institutions led to 
infusions of billions of federal dollars, and federal guarantees of 
billions more, putting the Treasury at significant risk.
  But ``too big to fail'' has another aspect that places our nation at 
significant risk--and that is the potential danger to competition when 
the marketplace becomes concentrated in the hands of so few competitors 
that consumers no longer have meaningful choice, and the healthy 
influence of competition on price, quality, and innovation are lost.

  It is important to the Judiciary Committee, as the Committee in 
charge of the laws protecting our economic freedoms against 
monopolization and other anticompetitive restraints of trade, that 
should our nation ever be faced with a similar financial system 
emergency in the future, that antitrust protections remain in place to 
ensure that our response does not leave us, when the dust clears, with 
an even more concentrated market, with companies that are even bigger, 
with more market power, and less responsive to the consumers they are 
supposed to serve.
  Accordingly, the Committee revised the emergency FDIC dissolution 
procedures for financial institutions posing imminent toxic danger to 
the broader financial system, to ensure that any proposed sale of 
significant assets to a competitor that occurs after the initial 
urgency has passed would be subject to effective pre-merger antitrust 
review when warranted, under the procedure developed for reviewing 
sales of assets during a bankruptcy proceeding. This procedure 
expedites the initial review, while permitting the antitrust 
enforcement agency to extend the period when more information is needed 
to make its assessment. The Committee also clarified that the federal 
antitrust enforcement agencies would retain their legal authority to 
challenge a merger or acquisition that would harm competition in 
violation of the antitrust laws.
  These changes balance the need for expeditious transfer of assets 
from a failing financial company to a safe new home with the imperative 
of preserving our competitive free market system.
  The Committee also revised provisions in the title of the bill 
dealing with regulation of over-the-counter derivatives markets. 
Provisions in the legislation as introduced sought to prohibit entities 
involved in the derivatives markets from engaging in or facilitating 
anticompetitive conduct. These entities included derivatives clearing 
organizations, swap dealers, major swap participants, swap execution 
facilities, clearing agencies, security-based swap dealers, and major 
security-based swap participants. There was language in these 
provisions that appeared to create exceptions, and that the Committee 
was concerned might potentially be read to create exemptions from the 
antitrust laws.
  The Committee revised these provisions to make clear that no 
antitrust exemptions are intended. In two instances, in parts of the 
derivatives title amending the Securities Exchange Act, the provisions 
were removed entirely. In three instances, in parts of the derivatives 
title amending the Commodity Exchange Act, the exception language was 
removed to make clear that the prohibitions apply without exception, 
and to further clarify that the antitrust laws remain fully in effect 
with respect to any conduct involved.


                            Practice of Law

  The Constitutional freedoms and legal rights we enjoy as Americans 
are ultimately protected in our courts, through the advocacy of 
attorneys who are licensed to practice before them. In keeping with 
these critical responsibilities, the activities of these ``officers of 
the court'' are regulated by the States, through government bodies, 
generally overseen by the State's highest court, with specialized 
expertise in the duties imposed by the code of legal ethics.
  Accordingly, the Judiciary Committee revised the Consumer Financial 
Protection Agency Act title to clarify that the new agency is not being 
given authority to regulate the practice of law, which is regulated by 
the State or States in which the attorney is licensed to practice. The 
Committee further clarified that this is not intended to preclude the 
new agency from regulating other conduct engaged in by individuals who 
happen to be attorneys or acting under their direction, as long as the 
conduct is not part of the practice of law or incidental to the 
practice of law.


                          Other Contributions

  Other contributions by the Judiciary Committee include revisions to 
the Consumer Financial Protection Agency's new investigative authority 
to bring it closer into conformity with the Antitrust Civil Process 
Act, on which it is modeled; clarifications to the new revised 
procedures for FTC rulemaking in the unfair and deceptive acts or 
practices area, to bring them closer in line with the Administrative 
Procedure Act, as intended; clarifications to the FDIC's new rulemaking 
authority to ensure it is used in compliance with the Administrative 
Procedure Act; and revisions to the new authority for nationwide 
service of subpoenas by the Securities and Exchange Commission to 
ensure that the authority will be exercised consistent with due 
process.

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