[Congressional Record Volume 156, Number 100 (Wednesday, June 30, 2010)]
[House]
[Pages H5233-H5261]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CONFERENCE REPORT ON H.R. 4173, DODD-FRANK WALL STREET REFORM AND
CONSUMER PROTECTION ACT
Mr. FRANK of Massachusetts. Mr. Speaker, pursuant to House Resolution
1490, I call up the conference report on 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, and ask for its immediate consideration.
The Clerk read the title of the bill.
The SPEAKER pro tempore. Pursuant to House Resolution 1490, the
conference report is considered read.
(For conference report and statement, see proceedings of the House of
June 29, 2010, book II.)
The SPEAKER pro tempore. The gentleman from Massachusetts (Mr. Frank)
and the gentleman from Alabama (Mr. Bachus) each will control 60
minutes.
The Chair recognizes the gentleman from Massachusetts.
General Leave
Mr. FRANK of Massachusetts. Mr. Speaker, at the outset I ask
unanimous consent that all Members have 5 legislative days in which to
revise and extend their remarks on this matter.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Massachusetts?
There was no objection.
Mr. FRANK of Massachusetts. Mr. Speaker, to begin, I want to yield
for a colloquy 3 minutes to one of the leaders in the House and
certainly in our committee in forging this particular legislation and
in fighting to make sure that fairness is done throughout all of our
efforts, the gentlewoman from California (Ms. Waters).
Ms. WATERS. Mr. Speaker, Members, I would like to begin by thanking
the chair of the Financial Services Committee, my colleague, Mr. Barney
Frank, for the leadership that he has provided in bringing us to this
point in doing regulatory reform. There were times I thought it would
never happen, but because of his brilliance, and because of his
leadership, and because of his ability to listen to all of the Members
who serve not only on that committee but on the conference committee,
we finds ourselves here.
But I would like at this point in time to engage my chairman to make
sure that I understand one particular word that was used in this
conference committee report.
So if I may make an inquiry of the gentleman from Massachusetts. I'm
trying to understand the meaning of the world ``initiated'' in
paragraph 5 of the conference report. Would ``initiated'' include any
program or initiative that has been announced by Treasury prior to June
25, 2010? And if so, I assume that that means that programs such as the
FHA refinance program, which would address the problem of negative
equity and which I understand Treasury and the FHA are working on but
is not yet publicly available, would be included as would the Hardest
Hit Fund program, which is not fully implemented yet.
And this would not prevent, for example, within the $50 billion
already allocated for HAMP, perhaps adjusting resources between
already-initiated programs based on their effectiveness.
Mr. FRANK of Massachusetts. If the gentlewoman would yield.
The answer is a resounding yes. And I certainly have been following
her leadership in trying to make sure that these programs do more than
many of them have done.
So the answer to her question is yes. Nothing new can be started
after June 25, but it does not reach back and strangle in the cradle
those programs that were under way. I confirm that the conference
report would not prevent adjusting resources between already initiated
programs based on their effectiveness.
Ms. WATERS. Thank you. I appreciate that.
Mr. BACHUS. Mr. Speaker, I yield myself 5 minutes.
Mr. Speaker, today I would like to address the good, the bad, and the
ugly in this bill.
The good: There is consumer protection. There is more disclosure and
transparency. There are some bipartisan provisions in this bill that
add a whistleblower office to the SEC. But the bad and the ugly far
outweigh those.
In total, this bill is a massive intrusion of Federal Government into
the lives of every American. It is the financial services equivalent of
ObamaCare, the government takeover of our health care system.
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If finally enacted, it will move us further toward a managed economy,
with the Federal Government's making decisions that have been and
should stay
[[Page H5234]]
in the hands of individuals and private businesses.
For instance, it will make the compensation of every employee of a
financial firm subject to rules set by a government overseer. Can you
imagine anything as basic as what an employer pays an employee
controlled by a Federal bureaucrat in Washington? It will even apply to
clerical employees. Government regulators will be empowered to seize
and break up even healthy firms they decide are systemic risks and to
even appoint new management to run these private companies.
As I said on the floor earlier today, this bill will institutionalize
AIG-type bailouts of creditors and counterparties, and it will saddle
taxpayers with the losses resulting from out-of-control risk-taking by
Wall Street institutions--gamblers. My colleagues on the other side of
the aisle will tell you this bill does not include a bailout fund. They
are wrong.
As I explained earlier, here it is, laid out. You can lend money to a
failing company. Now, how do you get money back from a failing company?
You can purchase their assets. You can guarantee their obligations. You
can sell or transfer their assets. It is there.
What does this cost?
As I explained earlier, the FDIC can borrow up to 90 percent of a
firm's assets. That's $2 trillion in the case of Bank of America alone.
They could borrow $2.1 trillion in that case alone. That is a bailout
fund, period.
Not only will it make bailouts permanent, but it will empower
government employees to go around settled bankruptcy law in so-called
``resolutions,'' done behind closed doors, with unequal treatment of
creditors at the whim of politically influenced government officials.
This has already happened. A financial firm's ability to survive a
crisis like the one we went through 2 years ago will depend, as it did
then, on whether its CEO can get the President of the New York Fed on
the phone on a Saturday night, as one firm did. Friendships and being
well-connected should not determine the success or failure of private
enterprises.
Finally, it imposes an $11 billion tax disguised as an FDIC
assessment. To fund this new government spending, they tax Main Street
banks and financial institutions. They raise their FDIC premiums even
though those premiums would go to bail out Wall Street firms and not to
save depositors, as the system was designed to do.
Mr. Speaker, if you voted against this bill on the floor, if you
voted against it in committee, you need to vote against it again,
because it is even worse than when it came out of the House.
We have seen the anger and frustration generated by the injustice of
too-big-to-fail bailouts. We have seen the folly of implied guarantees
as with Fannie and Freddie. We have seen, time after time, the failure
of government-run schemes to create jobs and to grow the real economy.
Nevertheless, here the majority party is again, doing the same thing
over and over, blindly hoping that, suddenly, this time, they will get
a different result. Well, you're right. The American people are
demanding a different result, and in a series of recent elections, they
have told incumbents to go home and to spend their own money, not
theirs--not the taxpayers'.
In conclusion, if you choose to bail out the creditors and
counterparties of the big Wall Street firms or to loan them money when
they get in trouble, don't expect the voters to bail you out come
November.
I reserve the balance of my time.
Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself such time as
I may consume to correct a very incomplete picture that was just given.
The gentleman keeps quoting that one section. I'm astonished--
astonished--that he quotes it so blatantly out of context. Yes, there
are powers that are given. Clearly, in the bill, it is only once the
entity has been put into receivership on its way to liquidation.
The gentleman from Alabama has several times today talked about the
powers as if they were just randomly given. I will be distributing the
entirety of this, and it is the most distorted picture of a bill I have
seen. The title, by the way, is headed: Orderly Liquidation of Current
Financial Companies. The purpose of this title is to provide the
necessary authority to liquidate failing financial companies. Again, I
am astonished that he would not give the Members the full picture that
comes as part of a subtitle that reads: Funding for Orderly
Liquidation.
Mr. BACHUS. Will the gentleman yield?
Mr. FRANK of Massachusetts. Yes.
Mr. BACHUS. When I say they shouldn't bail out the creditors and
counterparties, I don't care whether they are in receivership or not.
They should not bail them out, period.
Mr. FRANK of Massachusetts. Reclaiming my time, Mr. Speaker, please,
let's get this started on the right point. Instruct the gentleman as to
the rules. I thought he was going to ask me about what I said.
He has consistently read a part of this section, leaving out the part
that would help Members understand it. He didn't say what he just said.
He said he read these as if they were there in general. The powers he
talked about come in the subsets of the section: Funding for Orderly
Liquidation.
Those powers are just upon the appointment of a receiver. So this is
not to keep an institution going. This is not AIG. Yes, he can be
critical about the Bush administration on its own, without Congress,
with regard to AIG. We repeal in this bill the power under which they
acted and with the Federal Reserve's concurrence. By the way, it also
says in here that those powers are subject to section 206.
Again, I don't know why the gentleman--I guess I do know why they
would want to read this, but let me read it because it corrects
entirely the wholly inaccurate picture he gave people. The actions that
he read can be taken if the corporation determines mandatory terms and
conditions for all orderly liquidation actions.
AIG was kept alive. This cannot be kept alive. This happens only as
the death of the institution comes. He may think the Bush
administration picked its friends. I think he is being unfair to Mr.
Bernanke. I think he is being unfair to Mr. Paulson and Mr. Geithner.
Anyway, here are the rules they would have to follow:
First, they would have to determine that such action is necessary for
purposes of the financial stability and not for the purpose of
preserving the covered company.
Two, they would have to ensure that the shareholders do not receive
payment until the claims are paid.
They would have to ensure that unsecured creditors bear losses in
accordance with the priority of claims in section 210. That is the
FDIC.
They would have to ensure that the management is removed, and they
would have to ensure that the members of the board of directors are
removed.
So it is quite the opposite of what the gentleman talked about. It
says that, if an institution has gotten so indebted that it should not
be able to pay its debts, we would step in, and we would put it out of
business. It is totally different from what happened with AIG. It does
then say, yes, in some circumstances, there may be an ability to do
these things but only after the institution has been liquidated.
The gentleman never mentioned that. The gentleman talks about it and
talks about it, and he never mentions that this is only as the
institution is being put out of business. It is also very clear
elsewhere in here that any funds expended will come from the financial
institutions, not from the taxpayers.
Now, we had a good piece of legislation that we had adopted in
conference in order to try to do that here. Unfortunately, to get the
Republican votes necessary in the Senate for an otherwise very good
bill, we had to back that down, but it didn't change in here.
So, yes, there are provisions that the gentleman read, but unlike the
way he presented them, they don't stand by themselves. They come only
after it has been determined by the administration in power that the
financial stability of the company requires, first, that the company be
liquidated and, second, that some attention be given to its debts, but
it will be funding out of the other financial institutions, not from
the taxpayers.
I reserve the balance of my time.
Mr. BACHUS. At this time, I yield 3 minutes to the gentleman from
Texas (Mr. Smith), the ranking member of the Judiciary.
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Mr. SMITH of Texas. I thank the ranking member, the gentleman from
Alabama, for yielding.
Mr. Speaker, over a long history rooted in our Constitution, we have
relied on the rule of law and on impartial bankruptcy courts to resolve
the debts of failed enterprises. History has proven us correct.
Exhibit 1, for the benefits of the bankruptcy system, is the recent
case of Lehman Brothers. As the peak of the 2008 financial crisis
approached, Lehman declared bankruptcy. Within a week, it had sold its
core business. Within 6 weeks, its third-party credit default swaps had
been dissolved. That sealed off risk to other firms.
Experts have shown that the Lehman case didn't cause the financial
system to melt down. This bill discards our proven bankruptcy system
for something the American people forcefully reject: government-
sponsored bailouts. The roller coaster bailout ride of 2008 is what
caused the financial meltdown. Yet this bill just builds a bigger,
faster bailout roller coaster. The bill's sponsors openly admit that
they don't know if it will work, but they urge us to build it anyway.
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The question is why, and the answer is simple: When government picks
the winners and losers, government becomes more powerful. So do the
Wall Street winners that government picks. Meanwhile, Main Street and
free enterprise lose.
This administration and its congressional allies embrace what the
Founders fought against, ever-expanding government power over the lives
of free men and women. The Founders rejected this approach, the
American people reject it, and so should we.
Mr. FRANK of Massachusetts. Mr. Speaker, producing this legislation
has been one of the most impressive team efforts in which I have ever
participated, and an indispensable member of the team going back to the
early part of this century and his concern for mortgage lending and
fairness in the rules is the gentleman from North Carolina (Mr. Watt)
to whom I yield 3 minutes.
Mr. WATT. Mr. Speaker, I want to thank my colleague for the time and
for his leadership in this tremendous effort.
I would like to spend some time just challenging a notion that is out
there that this whole meltdown was unforeseeable by anybody, that
nobody could have foreseen it, and dispel that notion by understanding
that on March 16, 2004, the first anti-predatory lending bill was
introduced in this House of Representatives by Brad Miller of North
Carolina and myself. We saw forthcoming the possibility of this
substantial meltdown, because we knew that predatory loans were out
there being made to people who could not afford to pay them back.
Again, on March 9, 2005, in the 109th Congress we reintroduced the
bill, the anti-predatory lending bill. On October 22, 2007, we
reintroduced the anti-predatory lending bill in the 110th Congress.
Finally, finally, in this term of Congress, on March 26, 2009, we
reintroduced it for a fourth time, and finally it is incorporated into
this legislation.
Now, why is that important? It for the first time puts around loans
some prudential rules that say you ought to exercise some common sense
when you make a loan to somebody.
Don't do a loan to people without proper documentation of their
income. Don't give them a teaser rate for six months and then escalate
it by two or three percentage points and increase their fees and their
payments exponentially so that they can't pay it back. Don't give them
yield spread premiums that reward the people who get people into the
worst kind of loans, rather than giving them the best loans available.
Don't charge a prepayment penalty for allowing somebody to get out of a
higher interest rate into a lower interest rate. Make sure that when
you refinance, somebody gets some net tangible benefit out of the
refinance, other than the person that is making the loan. Don't allow
people to steer to the highest interest rate and worst possible
predatory loan when there are other loans available. Don't fail to give
the proper disclosures about what is going on. And don't prevent the
State Attorneys General from enforcing their own State laws, when we
don't even have a Federal law on the books.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. FRANK of Massachusetts. Mr. Speaker, I yield the gentleman 1
additional minute.
Mr. WATT. All of that is in this bill. If we had had this kind of
legislation in effect when we first started introducing it back in
2004, we could have avoided this.
Don't let anybody say that this was an unforeseeable chain of events
that led to this meltdown. We need to correct it and make sure that
going forward those kind of predatory practices never, never, never,
never occur again in our country.
Mr. BACHUS. Mr. Speaker, I yield 2 minutes to the gentleman from
Missouri (Mr. Blunt).
Mr. BLUNT. I thank the gentleman for yielding and for the hard work
he has done on this bill.
Mr. Speaker, clearly the country would like to see the right things
done for the economy. I think this bill fails to do many of the basic
things it should have done and does the things that we shouldn't have
done.
It doesn't end too-big-to-fail, Mr. Speaker. In fact, it
institutionalizes too-big-to-fail. Treasury will be able to front money
to wind down these failing firms, but also Treasury can decide if they
are at risk of failure. There is way too much involvement with the
taxpayers in coming in and doing exactly what the American taxpayers
are tired of seeing us doing.
The government-sponsored entities, Fannie Mae and Freddie Mac, that
we have talked about and will talk about more on this floor today and
have talked about for months as one of the prime causes for the
economic problems we face, as far as I can tell, they are not
mentioned, and if they are mentioned, Mr. Speaker, there is no reform.
The root cause of the problem we have in the economy today was caused
by these entities, and they are not addressed, and it was said they
would not be addressed.
More control, Mr. Speaker, by the Federal Reserve of more things and
more regulation. There is a new agency under the Federal Reserve that
will be in charge of setting new rules for the banking sector of the
country in its entirety.
Credit, Mr. Speaker, will not be more available. It will be less
available. People who are in the job-creating business are already
making announcements about what they will do as they respond to this.
Why is that? Because this bill steps further into managing the economy.
The government may be able to do lots of things, but making business
decisions is not one of them. Utility companies, food processors,
others who routinely try to protect themselves in a volatile
marketplace will not be able to do this.
Mr. Speaker, this bill will cost jobs at the very time we ought to be
figuring out how to increase jobs. I hope our colleagues will turn it
down and go back and do the right thing.
Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself 15 seconds to
correct the gentleman.
We have not created a consumer bureau under the Federal Reserve. It
will be housed in the Federal Reserve. The Federal Reserve will have no
ability to interfere. Some on the other side wish it would. But it will
be a fully independent consumer bureau. It will get its mail at the
Federal Reserve, but nobody there will be able to open it.
I now yield 4 minutes to the gentleman from Pennsylvania (Mr.
Kanjorski), one of the leaders in putting together this bill in the
area specifically of investor protection.
(Mr. KANJORSKI asked and was given permission to revise and extend
his remarks.)
Mr. KANJORSKI. Mr. Speaker, I rise in support of the conference
agreement.
Mr. Speaker, this is not a perfect bill, but this is a darn good
bill. I know we are going to hear objections on both sides of the
aisle, but if you have a chance to look at it, and it is a lengthy
bill, the 2,600 pages that are presented to both the House today and
within a week or so to the Senate constitutes the first revolutionary
change of securities laws in the United States since the Great
Depression. At that time we had a tremendous collapse, and our
forefathers and predecessors rose to the occasion by establishing a
regulatory platform within the United States that made us the envy of
the world.
[[Page H5236]]
We had in 2008 a collapse and a failure of that system. It primarily
grew out of the failure of the regulatory system to use all the powers
it had and to keep track with our highly speculative and greedful
nature at the time to allow us to go into the tremendous credit crisis
that we faced in 2008.
To now make an argument that we need do nothing and we will recover
and we will prosper is pure ludicrousness. The fact of the matter is
there are holes, there are loopholes, there are failures within our
system. We have to cleanse that system and fix that system, and that is
exactly what this bill does.
I am pleased to say that I had a part in doing that. I helped prepare
one amendment, the too-big-to-fail amendment. What we can say to our
successors and to our constituents is that never again in the future
will there be an unlimited power for financial institutions to grow
either in size, interconnectedness or other negative factors that they
can remain and put in jeopardy systemically the economy of the United
States and the world.
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We have the authority vested in our regulators to see that that
doesn't happen. If our regulators are able and will use those powers,
never again will we face the too-big-to-fail concept of having to bail
out some of the largest institutions in the world.
Secondly, a large part of this was devoted to investor protection. I
can't go through all the elements, but for the first time in history
we're going to allow the regulators to study and come up with rules and
regulations that allow a fiduciary relationship between broker-dealers,
investment advisers, and their clients--their customers. Most people in
this country think that already exists. It doesn't. After this bill and
the use of those new regulations, it will. You can then trust that the
advice being given by the broker-dealer or the investment counselor is
in your best interest as a customer and not in theirs.
We also call for the largest comprehensive study of the Securities
and Exchange Commission in the history of the commission. It will put
into place the tools necessary to revise the entire SEC in the future.
It also will be the predicate for that type of a comprehensive study to
be used in other agencies and commissions of government to allow us the
long road of reform in the American government. These things are in the
bill. Beside that, we have the capacity to require that no one in the
future need worry about the responsibility of the companies they're
dealing with as to whether or not they will have counterparties,
whether they are relying on representations that are true or false,
because we're going to have transparency within the system.
In the other areas dealing with derivatives, we're going to have
exchanges. We're going to have disclosure. Never has that happened in
the history of the United States. Over the years, the last two decades,
we have made attempts and have always failed. This time we have
succeeded.
Mr. Speaker, without reservation, I recommend to my colleagues a vote
of ``yes'' on this bill.
INTRODUCTION
Mr. Speaker, after nearly two years of study, discussion, hearings,
and intense legislative negotiations, we have produced a final bill
that will considerably strengthen our financial services
infrastructure, a system that not only underpins the American economy
but one that also serves as a cornerstone of our global markets. This
bill also represents the most significant overhaul of our Nation's
financial services regulatory framework since the reforms put in place
during the Great Depression.
This landmark agreement touches upon nearly every corner of our
financial markets. Among other things, this bill ends the era in which
financial institutions can become too big to fail in several ways,
including my provision to allow regulators to preemptively break up
healthy financial firms that pose a grave threat to the U.S. economy.
Additionally, the bill regulates financial derivatives for the first
time, establishes procedures for shutting down failing financial
companies in an orderly manner, forces the registration of hedge fund
advisers, and holds credit rating agencies accountable through greater
liability. This bill also greatly expands investor protections by
setting up a fiduciary standard for broker-dealers offering
personalized investment advice, allowing shareholders to nominate
candidates for corporate boards, and creating a bounty program to
reward whistleblowers whose tips lead to successful enforcement
actions.
Moreover, this legislation enhances the powers and resources of the
U.S. Securities and Exchange Commission, SEC. The pending conference
agreement also forces a comprehensive study of the way that the SEC
operates which will lead to much needed management reforms.
Furthermore, the conference agreement creates for the first time a
Federal office to monitor insurance matters. Finally, this bill will
comprehensively modify mortgage lending practices--including escrow
procedures, mortgage servicing, and appraisal activities.
In short, the conference report on H.R. 4173 is a very good package
that will restructure the foundations of the U.S. financial system. It
will enhance regulation over more products and actors, create
additional investor protections and consumer safeguards, and promote
greater accountability for those who work in our capital markets. For
these reasons, I urge my colleagues to vote in favor of this momentous
agreement.
ENDING TOO BIG TO FAIL
Historians will likely long argue about the causes of the 2008 credit
crunch, but one cannot deny that one huge contributing factor was the
failure of government regulators to rein in dangerous financial
institutions. Giant films like American International Group, AIG, as
well as many smaller firms, engaged in recklessly risky behavior that
rewarded them with huge profits during the build-up of the housing
bubble, but then nearly wiped them out as the bubble burst. Actually,
AIG and other firms would have collapsed and our economy would have
been sent back to the Dark Ages, except for the request of the Bush
Administration to establish the $700 billion Troubled Asset Relief
Program to prop up our country's teetering financial system.
Those terrifying months in late 2008 convinced me that the Federal
government needed to play a far more vigorous role in policing the
activities of the major financial players in our economy. During the
last two years, my top priority has therefore been to avoid having any
future Congress face the same dilemma that we faced in 2008: ``bail
out'' Wall Street to save Main Street or risk the collapse of the
entire American economy. I decided that the most important element of
any reform of the financial system needed to ensure that no financial
firm could be allowed to become so big, interconnected, or risky that
its failure would endanger the whole economy.
In this regard, I am pleased that this legislation helps bring an end
to the era of too-big-to-fail financial institutions in at least three
significant ways. First, it achieves this end by establishing new
regulatory authorities to dissolve and liquidate failing financial
institutions in an orderly manner that protects our overall economy.
The Obama Administration proposed these much needed reforms as an
initial step for ending the problem of too big to fail.
Second, the conference agreement incorporates my amendment vesting
regulators with the power to limit the activities of and even disband
seemingly healthy financial services firms. Specifically, the Kanjorski
amendment permits regulators to preemptively break up and take other
actions against financial institutions whose size, scope, nature,
scale, concentration, interconnectedness, or mix of activities pose a
grave threat to the financial stability or economy of the United
States.
Third, the final agreement contains a fairly strong Volcker rule that
will limit the activities of financial institutions going forward and
prevent them from becoming too big to fail. Inspired by the legendary
former Federal Reserve Chairman, Paul Volcker, this rule will bar
proprietary trading by banks, significantly curtail bank investments in
private equity funds and hedge funds, and cap the liabilities of big
banks. As a result, the Volcker rule will prohibit banks from engaging
in highly speculative activities that in good times produce enormous
profits but in bad times can lead to collapse.
Together, these three reforms will better protect our financial
system and mitigate the problem of too big to fail. The Kanjorski
amendment and the Volcker rule will also substantially resurrect the
barrier between commercial and investment banking that resulted in a
stable financial system for more than 70 years after the Great
Depression.
As the Wall Street Journal on Saturday reported, ``. . . the bill
gives regulators power to constrain the activities of big banks,
including forcing them to divest certain operations and to hold more
money to protect against losses. If those buffers don't work, the
government would have the power to seize and liquidate a failing
financial company that poses a threat to the broader economy.'' I
wholeheartedly agree with this independent assessment.
In sum, the conference agreement on H.R. 4173 represents an historic
achievement. By addressing the problem of too big to fail, this
legislation will lead to a new era of American prosperity and financial
stability for decades to
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come. For this reason alone, this bill deserves to become law.
INVESTOR PROTECTION AND SECURITIES REFORMS
As the House developed this legislation, I played a key role in
drafting the title concerning investor protection and securities
reform. The Administration's proposal and the Senate's bill contained
some important improvements, but the initial House plan had many, many
more. I am pleased that the final package more closely resembles the
initial House legislation rather than the original Administration and
Senate plans.
Among its chief reforms in the area of investor protection, the
conference agreement provides that the SEC, after it conducts a study,
may issue new rules establishing that every financial intermediary who
provides personalized investment advice to retail customers will have a
fiduciary duty to the investor. A traditional fiduciary duty includes
an affirmative duty of care, loyalty and honesty; an affirmative duty
to act in good faith; and a duty to act in the best interests of the
client. Through this harmonized standard of care, both broker-dealers
and investment advisers will place customers' interests first.
Regulators, practitioners, and investor advocates have become
increasingly concerned that investors are confused by the legal
distinction between broker-dealers and investment advisers. The two
professions currently owe investors different standards of care, even
though their services and marketing have become increasingly
indistinguishable to retail investors. The issuance of new rules will
fix this long-standing problem.
Additionally, the legislation adopts recommendations made by SEC
Chairman Mary Schapiro, SEC Inspector General David Kotz, and Harry
Markopolos, the whistleblower who sought for many years to get
regulators to shut down the $65 billion Ponzi scheme perpetrated by
Bernard Madoff. Specifically, the conference agreement provides the SEC
with the authority to establish an Investor Protection Fund to pay
whistleblowers whose tips lead to successful enforcement actions. The
SEC currently has such authority to compensate sources in insider
trading cases, and the whistleblower provision in this bill would
extend the SEC's power to compensate other tipsters who bring
substantial evidence of other securities law violations.
The conference agreement also responds to other problems laid bare by
the Madoff fraud. These changes include increasing the line of credit
at the U.S. Treasury from $1 billion to $2.5 billion to support the
work of the Securities Investor Protection Corporation, SIPC, and
raising SIPC's maximum cash advance amount to $250,000 in order to
bring the program in line with the protection provided by the Federal
Deposit Insurance Corporation.
This bill additionally increases the minimum assessments paid by SIPC
members from $150 per year, regardless of the size of the SIPC member,
to 2 basis points of a SIPC member's gross revenues. This fix will help
to ensure that SIPC has the reserves it needs in the future to meet its
obligations. Finally, in response to the Madoff fraud, the final
product includes my legislation to allow the Public Company Accounting
Oversight Board to examine the auditors of broker-dealers.
For too long, securities industry practices have deprived investors
of a choice when seeking dispute settlement, too. In particular, pre-
dispute mandatory arbitration clauses inserted into contracts have
limited the ability of defrauded investors to seek redress. Brokerage
firms contend that arbitration is fair and efficient as a dispute
resolution mechanism. Critics of mandatory arbitration clauses,
however, maintain that the brokerage firms hold powerful advantages
over investors and hide mandatory arbitration clauses in dense contract
language.
If arbitration truly offers investors the opportunity to efficiently
and fairly settle disputes, then investors will choose that option. But
investors should also have the choice to pursue remedies in court,
should they view that option as superior to arbitration. For these
reasons, the final package provides the SEC with the authority to
limit, prohibit or place conditions on mandatory arbitration clauses in
securities contracts.
Another significant investor protection provided in this conference
agreement concerns proxy access. In particular, H.R. 4173 clarifies the
ability of the SEC to issue rules regarding the nomination by
shareholders of individuals to serve on the boards of public companies.
These provisions regarding proxy access will enhance democratic
participation in corporate governance and give investors a greater
voice in the companies that they own.
A myriad of problems presently confronts the SEC, perhaps none more
urgent than the need for adequate resources. Chairman Schapiro and
others have repeatedly stressed the need to increase the funding to
ensure that the agency has the ability to keep pace with technological
advances in the securities markets, hire staff with industry expertise,
and fulfill one of its core missions: the protection of investors. In
response, this agreement slightly increases the independence of the SEC
in the appropriations process, doubles the authorized SEC budgets over
5 years, and creates a new reserve fund to support technology
improvements and address emergency situations, like the flash crash
that occurred in May 2010.
Moreover, H.R. 4173 modifies the SEC's structure by creating a number
of new units and positions, like an Office of the Investor Advocate, an
office to administer the new whistleblower bounty program, and an
Office of Credit Ratings. However, the SEC's systemic failures to
effectively police the markets in recent years required Congress to do
even more to shake up the agency's daily operations. As such, the
legislation includes my provision mandating an expeditious,
independent, comprehensive study of the securities regulatory regime by
a high caliber body with expertise in organizational restructuring to
identify deficiencies and reforms, and ensure that the SEC and other
regulatory entities put in place further improvements designed to
provide superior investor protection. My hope is that this study will
ultimately become the model for reforming other agencies. The final
bill also includes my deadlines generally forcing the SEC to complete
enforcement, compliance examinations, and inspections within 180 days,
with some limited exemptions for complex cases.
The conference agreement on H.R. 4173 additionally modifies, enhances
and streamlines the powers and authorities of the SEC to hold
securities fraudsters accountable and better protect investors. For
example, the SEC will have the authority to impose collateral bars on
individuals in order to prevent wrongdoers in one sector of the
securities industry from entering another sector. The SEC will also
gain the ability to make nationwide service of process available in
civil actions filed in Federal courts, consistent with its powers in
administrative proceedings.
The bill further facilitates the ability of the SEC to bring actions
against those individuals who aid and abet securities fraud. The
Securities Exchange Act of 1934 and the Investment Advisers Act of 1940
presently permit the SEC to bring actions for aiding and abetting
violations of those statutes in civil enforcement cases, and this bill
provides the SEC with the power to bring similar actions for aiding and
abetting violations of the Securities Act of 1933 and the Investment
Company Act of 1940. In addition, the bill not only clarifies that the
knowledge requirement to bring a civil aiding and abetting claim can be
satisfied by recklessness, but it also makes clear that the Investment
Advisers Act of 1940 expressly permits the imposition of penalties on
those individuals who aid and abet securities fraud.
One final investor protection reform that I drafted and want to
highlight concerns the new authority of the SEC and the Justice
Department to bring civil or criminal law enforcement proceedings
involving transnational securities frauds. These are securities frauds
in which not all of the fraudulent conduct occurs within the United
States or not all of the wrongdoers are located domestically. The bill
creates a single national standard for protecting investors affected by
transnational frauds by codifying the authority to bring proceedings
under both the conduct and the effects tests developed by the courts
regardless of the jurisdiction of the proceedings.
In the case of Morrison v. National Australia Bank, the Supreme Court
last week held that section 10(b) of the Exchange Act applies only to
transactions in securities listed on United States exchanges and
transactions in other securities that occur in the United States. In
this case, the Court also said that it was applying a presumption
against extraterritoriality. This bill's provisions concerning
extraterritoriality, however, are intended to rebut that presumption by
clearly indicating that Congress intends extraterritorial application
in cases brought by the SEC or the Justice Department.
Thus, the purpose of the language of section 929P(b) of the bill is
to make clear that in actions and proceedings brought by the SEC or the
Justice Department, the specified provisions of the Securities Act, the
Exchange Act and the Investment Advisers Act may have extraterritorial
application, and that extraterritorial application is appropriate,
irrespective of whether the securities are traded on a domestic
exchange or the transactions occur in the United States, when the
conduct within the United States is significant or when conduct outside
the United States has a foreseeable substantial effect within the
United States.
OTHER REASONS TO SUPPORT THE CONFERENCE REPORT
The bill that we are considering today contains a number of other
worthwhile elements that should become law, and I want to highlight
several issues on which I personally worked or in which I have a deep,
long-standing interest.
First, the bill creates a Federal Insurance Office within the
Treasury Department. A key
[[Page H5238]]
component of our financial services industry, insurance is too often
misunderstood or left behind in decisions made by the Federal
government. As a result, I have long worked on the creation of this new
office that will effectively monitor this industry sector for potential
risks going forward. As a result of this new office, the United States
will for the first time speak with a uniform voice on insurance matters
on the international stage and have the authority to stand behind its
words. I am therefore pleased that the Federal Insurance Office is
finally becoming law.
Second, I have worked diligently on the title concerning the
registration of hedge fund managers and private equity fund advisers.
To promote market integrity, we need those individuals who handle large
sums of money and assets to register with the SEC and provide
information about their trades and portfolios. While I remain concerned
about the registration exemptions put in place by others during the
legislative process, I believe that these reforms are necessary to
improve the quality of regulation and protect against systemic risk.
While hedge funds may not have directly caused this latest financial
crisis, we do know that these investment vehicles have previously
contributed to significant market instability, as was the case in the
collapse of Long-Telin Capital Management in 1998. Thus, this reform is
an important step in understanding and controlling systemic risk.
Third, this legislation greatly increases the accountability of
credit rating agencies. The overly optimistic assessments by Moody's,
Fitch, and Standard and Poor's about the quality of structured
financial products constructed out of garbage aided and abetted the
financial crisis. By imposing structural, regulatory, and liability
reforms on rating agencies, this agreement will change the way
nationally recognized statistical rating organizations behave and
ensure that they effectively perform their functions as market
gatekeepers going forward.
Fourth, I am very pleased that this agreement will modify escrowing
procedures, mortgage servicing, and appraisal activities. I began
working 9 years ago on these issues after identifying predatory
practices, faulty appraisals, and other problems in the Poconos housing
markets. These reforms are long overdue.
Among other things, these new mortgage lending standards will include
a requirement that all borrowers with higher-cost mortgages have an
escrow account established in order to pay for property taxes and
homeowners' insurance. Studies have shown that at the height of the
crisis, borrowers with higher-cost mortgages were substantially less
likely than borrowers with good credit records to have an escrow
account. Borrowers with less than perfect credit records, however, need
more help in budgeting for these sizable expenses. This bill fixes this
problem.
Title XIV of the bill also has reforms with respect to force-placed
insurance. Predatory lenders often impose costly force-placed
insurance, even though the homeowner may already have a hazard
insurance policy. This legislation will clarify the procedures for when
a servicer can force place insurance. The bill's bona fide and
reasonable cost requirements will also ensure that mortgage servicers
shop around for the best rates for the force-placed insurance that they
impose. Moreover, the bill's force-placed insurance reforms will ensure
that consumers who are erroneously billed for such premiums will have
the monies refunded within 15 business days.
Additionally, the bill's appraisal reforms will update Federal
appraisal laws for the first time in a generation. We now know that
inflated appraisals and appraiser coercion and collusion contributed
greatly to the creation of the housing bubble. We must respond by
putting in place a strong national appraisal independence standard that
applies to all loans. We must also comprehensively reform the appraisal
regulatory system. This bill does both things.
Fifth, I am extremely pleased that this bill provides $1 billion for
a national program to offer emergency bridge loans to help unemployed
workers with reasonable prospects for reemployment to keep their homes.
This new national initiative is based on Pennsylvania's successful
Homeowners' Emergency Mortgage Assistance Program, HEMAP. Since 1983,
HEMAP has saved 43,000 homes from foreclosure by helping to cover
mortgage payments until homeowners find new jobs. With unemployment
rates still unacceptably too high and far too many homeowners
experiencing problems in paying their mortgages through no fault of
their own, the time has come to replicate HEMAP at the national level.
Finally, the lack of regulation of the over-the-counter derivatives
market has been a serious concern of mine for many years. In 1994, for
example, I introduced a bill to regulate derivatives and other complex
financial instruments. This conference agreement finally addresses the
utter lack of regulation in this enormous market by mandating the
clearing of most derivative contracts on exchanges so that we have more
transparency. For those derivatives that are not cleared, the bill's
reporting and disclosure requirements ensure that information on the
transaction is maintained.
LONG-TERM CONCERNS
A sweeping, industry-wide regulatory reform bill like this one rarely
comes along. As has been the case after the enactment of other overhaul
bills, we can expect problems to manifest themselves and unintended
consequences to occur.
While this bill incorporates the major goals of the Volcker rule, I
had hoped for an even stronger version. Unfortunately, the ban on
investments in or sponsorship of hedge funds and private equity is not
as robust as I would have liked. The Volcker rule could have been
stronger had the conferees accepted my amendment to provide for a de
minimis exemption of tangible common equity, as opposed to Tier 1
capital, and a dollar cap on the investment. This amendment would have
tightened the bill and better protected our financial markets from
systemic risk.
Regrettably, the legislation also permanently exempts small public
companies from the Sarbanes-Oxley Act's requirement to obtain an
external audit on the effectiveness of internal financial reporting
controls. This exemption disregards the significant concerns of
investors--those that provide capital and bear the risk of losing their
retirement savings.
External audits of internal control compliance costs have
dramatically decreased in recent years. The stock prices of those
companies that have complied with this law have significantly
outperformed the stock prices of those that have not complied.
Additionally, evidence suggests that 60 percent of all financial
restatements have occurred at companies that will never be required to
comply with the law's external audit requirements.
Together, these facts certainly suggest that the Sarbanes-Oxley
exemption provision has no place in a reform bill that is supposed to
strengthen investor protections. Moreover, I am worried about the
investors at the more than 5,000 public companies now exempted who may
one day wake up to discover their hard earned savings pilfered by
corporate accounting misdeeds as was the case in Enron, WorldCom, and
Tyco.
As previously mentioned, I have additional worries about the
exemptions granted to the registration of private fund advisers. There
are many other types of exemptions embedded throughout this bill,
including exemptions in the derivatives title and in the powers of the
new Consumer Financial Protection Bureau. While I hope that regulators
and the entities that they regulate will prudently apply these
exemptions, I have apprehensions that in the long term the exemptions
will swallow the rules. We must remain vigilant against such an
outcome.
Similarly, the success of this landmark reform effort will ultimately
depend on the individuals who become the regulators. The key lesson of
the last decade is that financial regulators must use their powers,
rather than coddle industry interests. In this regard, I hope that
regulators will judiciously use the new powers that I have drafted
regarding the break up of too-big-to-fail firms. If just one regulator
uses these extraordinary powers just once, it will send a powerful
message to industry and significantly reform how all financial services
firms behave forever more.
Additionally, I continue to have apprehensions about the interchange
provisions inserted into this legislation by the Senate. This issue,
without question, would have benefitted from additional time and study.
I am hopeful that we got the balance right and that these new
limitations do not ultimately impair the performance of credit unions
and community banks. If necessary, I stand ready to change the new law
in this area.
There are several other lingering concerns that I have about this
bill, as well. For example, it grants the Federal Reserve far more new
powers than I would have liked. The bill also sets a very high bar of a
two-thirds supermajority vote of the Financial Stability Oversight
Council to take action under my too-big-to-fail amendment. There is
some wisdom in this requirement, but if too many individuals with an
anti-regulatory bias serve on the Council they will neglect to use the
powers that Congress gave them in order to protect our financial
system.
Finally, our work today is only a beginning, not an end. Going
forward, Congress needs to attentively watch our changing financial
marketplace and carefully monitor our regulators in order to protect
against systemic risk, forestall potential abuses of corporate power,
safeguard taxpayers, and defend the interests of consumers and
investors. Moreover, the United States must continue to encourage its
allies abroad to adopt strong financial services regulatory reforms so
that we will have a strong, unified global financial system.
Although we may be completing our work on this bill, it is important
for us to remain vigilant in each of the areas about which I have
[[Page H5239]]
raised concerns. I, for one, plan to continue to closely monitor and
carefully examine each of these matters.
CLOSING
Before closing, Mr. Speaker, I wish to congratulate the gentleman
from Massachusetts, Financial Services Committee Chairman Barney Frank,
for his outstanding leadership in guiding this extremely complex bill
through the legislative process. This conference marks the culmination
of a long, thoughtful series of hearings, markups, floor debates, and
conference negotiations. Chairman Frank performed exceptionally at
every stage of the process, and his name deserves to be attached to
this landmark agreement. Senate Banking Committee Chairman Christopher
Dodd deserves similar praise for his hard work. This is why I offered
the amendment in conference to name this law the Dodd-Frank Wall Street
Reform and Consumer Protection Act.
Additionally, I want to counter the comments of those who have
myopically criticized this package because it does not abolish Fannie
Mae and Freddie Mac. By reforming the securitization process, risk
retention requirements, and rating agency accountability, this bill
lays the foundation for our upcoming work to address the future of
these two institutions and, more broadly, the entire housing finance
system. The reform of Fannie Mae, Freddie Mac, and the housing finance
system is the next big legislative mountain that the Financial Services
Committee must climb, and when the Congress returns after Independence
Day, I will convene additional hearings to advance work on legislation
to achieve this objective.
Mr. Speaker, while I may have some lingering doubts about this
legislative package, it is overall a very good agreement. In short, the
conference report represents a reasoned, middle ground that strikes an
appropriate balance and does what we need it to do. It ends the problem
of too-big-to-fail financial institutions, effectively regulates the
derivatives products which some have referred to as financial weapons
of mass destruction, and it greatly strengthens investor protections.
It also regulates many more actors in our financial markets,
establishes a Federal resource center on insurance issues, and holds
rating agencies accountable for their actions. In sum, Mr. Speaker, I
support this bill and urge my colleagues to vote for it.
Mr. BACHUS. At this time I yield 3 minutes to the gentleman from
Indiana (Mr. Pence).
(Mr. PENCE asked and was given permission to revise and extend his
remarks.)
Mr. PENCE. I thank the gentleman for yielding.
Mr. Speaker, I rise in opposition to the conference report for H.R.
4173, the so-called ``Restoring American Financial Stability Act.''
We're used to creative titles around here, but I've got to tell you,
during a time of extraordinary economic duress, millions of Americans
unemployed, failed economic policies, it is darkly ironic that a bill
that will do anything but restore financial stability is named for that
purpose.
The truth of the matter is, when you look at this legislation, it's
proof positive again that this majority just doesn't get it. The
American people are not looking at Washington, D.C., and clamoring for
more spending, more taxes, and more bailouts. They're looking at
Washington, D.C., and saying, When are you going to focus on creating
jobs? When are you going to set partisan differences aside, power
grabs, and Big Government agendas aside to do something to put
Americans back to work?
Under the guise of financial reform, Democrats today are pushing yet
another bill that will kill jobs, raise taxes, and make bailouts
permanent. Let me say that again. This legislation will kill jobs by
restricting access to credit, it will kill jobs by raising taxes on
those that would provide loans and opportunity to small business owners
and family farmers, and it makes the bad ideas of the Wall Street
bailout permanent.
Free market economics depends on the careful application of a set of
ideals--traditional American ideals and principles. Chief among them is
the notion that the freedom to succeed must include the freedom to
fail. Personal responsibility is at the very center of the American
experiment from an economic standpoint. It is that center from which we
have become not only the freest, but the most prosperous Nation in the
history of the world.
As my colleagues on the other side of the aisle know, I vigorously
opposed the Wall Street bailout because I thought it departed from that
fundamental principle of personal responsibility and limited
government. And I rise today to vigorously oppose this legislation that
takes the bad ideas of the Wall Street bailout and makes them
permanent.
This legislation codifies the notion of too big to fail, a policy and
an approach the American people have roundly rejected. It will give
government bureaucrats more power to pick winners and losers. When a
financial firm is failing, the Treasury Secretary and the FDIC will
actually have the authority to take taxpayer dollars and decide which
creditors to pay back and how and when they'll get paid.
The American people don't want Washington, D.C., in that business.
They want a refereed private sector that says ``yes'' to traditional
bankruptcy and ``no'' to bailouts, because we're here to protect
taxpayers and not Wall Street. This bill fails in that regard. I urge
it be rejected and let's start over with legislation that's built on
American ideals.
Mr. FRANK of Massachusetts. I now yield 3 minutes to one of the
leaders in fashioning protection for consumers, the gentlewoman from
New York (Mrs. Maloney).
Mrs. MALONEY. Thank you, Chairman Frank, for yielding, for your
leadership, and for presiding over the most open and transparent
conference process in the history of this Congress.
The Dodd-Frank bill is landmark legislation which will protect
consumers and investors while allowing our financial services industry
to continue financing the creativity and innovation which has, even in
these very difficult times, made the American economy the envy of the
world. This bill restores safety and soundness, reduces the likelihood
of another systemic crisis, restores faith and confidence in our
institutions and markets, while safeguarding Americans from predatory,
unfair, and deceptive practices.
I have made it a mission throughout my career to help put consumers
on an equal footing with their financial institutions through laws like
the Credit Card Act. And today, we can take a huge step forward toward
a more level playing field with the creation of the Consumer Financial
Protection Bureau.
For far too long in our financial system and its products, any
concerns about consumer protection came in a distant second or a third
or none at all. Now, anyone who opens a checking or savings account,
anyone who takes out a student loan or a mortgage, anyone who opens a
credit card or takes out a payday loan will have a Federal agency on
their side to protect them. For the first time, consumer protection
authority will be housed in one place. It will be completely
independent, with an independently appointed director, an independent
budget, and an autonomous rulemaking authority. And, very importantly,
it will have a seat at the table at the Financial Stability Oversight
Council. Continuity and oversight of our financial system will consider
not only safety and soundness but also the best interests of the
American consumer, the American taxpayer, the American citizen.
I am particularly pleased that two items that I offered were included
that will give consumers direct access to the CFPB through a consumer
hotline and consumer ombudsperson. The bill also addresses the
challenge of interchange fees. Working with Senator Durbin and
Representative Meeks, we were able to craft a balanced compromise that
addressed both the concerns of merchants about high interchange fees
and the concerns of the financial sector to be fairly compensated for
their services. This bill ensures transparency, establishes
accountability, and protects consumers and investors.
America has long been the world leader in financial services. With
this landmark bill, we can set an example and take the lead in global
financial reform. I urge a ``yes'' vote.
Mr. BACHUS. At this time, Mr. Speaker, I yield 2 minutes to the
ranking member of the Subcommittee on International Monetary Policy and
Trade, the gentleman from California (Mr. Gary G. Miller).
{time} 1610
Mr. GARY G. MILLER of California. Mr. Speaker, I rise today in
opposition to this bill. This country is going
[[Page H5240]]
through a period of great economic distress; and ultimately, this bill
would only serve to heighten uncertainty in the marketplace, restrict
access to credit, and place more and more undue burdens on the backs of
American small businesses.
This bill eliminates consumer options in housing markets. This bill
includes language that alters ways consumers choose to pay their
mortgage origination fees. Currently, consumers have the choice to pay
origination fees up front, partially finance costs through the rate, or
some combination of the two. This bill eliminates the consumer's
ability to partially pay up front and partially finance costs through
the rate, ultimately leading to higher costs and fewer options
available to home buyers.
This bill favors the Federal Government over the private market. This
bill places several new onerous restrictions on private community banks
and then explicitly exempts the Federal Government from these same
restrictions. The effect of these new restrictions is that consumers
will be steered toward the government when seeking financing options
and encouraging a greater takeover of the economy by the Federal
Government.
This bill once again breaks our promise to the American people that
excess TARP funds would go to pay down the debt and deficit. When this
body enacted TARP in an effort to stave off a total economic collapse,
we promised that any return the Federal Government made from the
taxpayers' investment into the financial sector of this economy would
go directly to paying down the deficit and the national debt, currently
over $13 trillion. Instead, this bill breaks that promise by taking
remaining TARP funds and using them to pay for the Federal takeover of
the economy.
What we should do instead, we need to get the Federal Government out
of the way so that small businesses can begin to innovate and expand.
We need to provide a regulatory framework that provides community banks
and small businesses the ability to make their own financial decisions.
Mr. Speaker, we cannot continue to break our promise to the American
people. The future of this great Nation and that of its sons and
daughters depends on the actions we take here today. And I can only
conclude that this legislation will prolong this recession and lead us
further down the road of high deficit and greater debt. I urge a ``no''
vote on this bill.
Mr. FRANK of Massachusetts. I yield 1 minute to the gentleman from
Georgia (Mr. Barrow).
Mr. BARROW. Mr. Speaker, I rise in support of H.R. 4173, the Wall
Street Reform and Consumer Protection Act, because I believe this bill
takes positive steps to protect us from the risky and abusive behavior
that took our country to the verge of financial ruin.
I voted against the bank bailout bill because there wasn't enough
accountability for how that money was going to be used. It also didn't
get at the root of the problem. This legislation gets at the root of
the problem by protecting consumers from abusive and predatory
financial practices. It also gets banks back in the business of making
good loans instead of gambling with our money. I look forward to
passage of this legislation, and I urge my colleagues to lend their
support as well.
Mr. BACHUS. Mr. Speaker, at this time I yield 2 minutes to the
gentleman from Georgia (Mr. Price), the chairman of the Republican
Study Committee.
Mr. PRICE of Georgia. Mr. Speaker, look, this ought to sound pretty
familiar. Here's just part of this bill, another 2,000-page
monstrosity. Look at it, Mr. Speaker. It's down there held together by
rubber bands. It is called the Dodd-Frank Wall Street reform bill.
Senator Dodd even said about it, ``No one will know until this is
actually in place how it works.'' That's no way to do business.
The fundamental assumption of this bill is that since the smart
people regulating banks let us down, we should just hire really, really
smart people to prevent it from happening again. That assumption is not
only false, it's dangerous. When the government picks winners and
losers, the Nation loses. If my colleagues on the other side of the
aisle believe that the same regulators who failed to see the housing
crisis are now going to see the next crisis thanks to heavy-handed
government regulation, then the American people would say to the
Democrats in charge that they put too much faith in the power of
Washington to see the future.
The fundamental question we've got to answer is, If this law were in
place in 2008, would it have prevented the crisis? The answer to that
question is clearly ``no.'' More oppressive job-killing regulation
isn't the answer. What we need is flexible and accountable and nimble
regulation. This bill does not do it.
What will it do? It will ensure bailouts. It puts bailouts in place
forever. It doesn't address Fannie and Freddie, at the epicenter of the
problem. It doesn't address it at all. It kills American jobs with
oppressive regulation, and it will decrease the availability of credit
and increase the cost of credit to all the American people. And that's
even more angering to Americans because they know that there are
positive solutions.
H.R. 3310 is the bill that we put forward nearly a year ago now that
would make certain that we address the issue of regulatory reform in a
positive way that makes it more flexible and nimble, that addresses the
issue of Fannie and Freddie, actually solves the challenge that got us
into this crisis in the first place, and makes certain that we end
bailouts. The American people are sick and tired of bailouts. That
bill, Mr. Speaker, will ensure that bailouts continue. The American
people are urging us to vote ``no'' on this bill.
Mr. FRANK of Massachusetts. I yield 2 minutes to the gentleman from
New York (Mr. Meeks), a very important member of the committee who was
helpful in forging some of the pieces of this.
Mr. MEEKS of New York. I thank the chairman for yielding.
Today is truly a historic day largely because of the great,
magnificent job of our chairman, Barney Frank, who we are so proud of.
Very few people could have marshaled this bill in the way that he did.
And because of him and that leadership, today we end too big to fail.
We implement unprecedented consumer protections, and we issue rules
that will prevent taxpayers from footing the bill for the irresponsible
behavior of others while still--because I'm a New Yorker--maintain New
York's standing as the world's financial capital.
As Chairman Frank is fond of noting, this bill has death panels for
the greedy financial institutions. If you are an institution that is
causing systemic risk, this bill allows regulators to resolve you and
dissolve you without recourse to any taxpayer money. I repeat. Let me
emphasize, taxpayers will bear no cost for liquidating risky
interconnected financial firms.
This bill includes strong investor protections and transparency
mechanisms. Through the use of stress tests, which Representative
Dennis Moore and I advocated for and the results of which will be
published, it will increase transparency for investors and increase the
amount of information available for investors to make wise decisions
with their hard-earned savings.
Most importantly for my constituents, this bill establishes a
Consumer Financial Protection Bureau to police lenders to ensure that
the predatory lending that Mr. Watt was talking about that ensnared so
many unsuspecting Americans will be halted. Led by an independent
director, this office will be able to act swiftly so consumers will not
need to wait for an act of Congress for years and years and years to
receive protection from unscrupulous behavior.
As to interchange, we have placed explicit language in the bill to
prohibit intrabrand price discriminations which would have put credit
unions and community banks at a disadvantage. To address the concerns
to the State treasurers and prepaid card providers for the underbanked,
we explicitly exempt them from interchange fee regulation. And finally,
by fixing concerns the Federal Government had, we potentially save the
taxpayer $40 million per year, according to Treasury estimates.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. FRANK of Massachusetts. I yield the gentleman an additional 15
seconds.
Mr. MEEKS of New York. We need this bill. It is the right bill.
Without lending from Wall Street, there could be no Main Street. This
bill responsibly
[[Page H5241]]
regulates the former to ensure the vitality of the latter.
Mr. BACHUS. I yield 2 minutes to the gentleman from California (Mr.
McCarthy).
Mr. McCARTHY of California. I thank the gentleman for yielding.
Mr. Speaker, I rise today in opposition to this conference report.
You know, at a time when California has 12.4 percent unemployment, and
my district's even higher at 16.5 in my home county of Kern County, my
constituents are asking me, What is being done to create jobs?
For the folks that have been following this debate today, this is
just another example of Washington not listening to their concerns.
Instead of policies that promote private sector job growth, this bill
would create more government. This bill before us today would create a
new bureau at the Federal Reserve with sweeping authority and a budget
to create plenty of new government jobs in Washington, D.C. It also
creates a new office of Financial research, empowered to collect
personal information about all of our international transactions. This
office can actually issue subpoenas to get the information these
unelected bureaucrats want to have about us.
But aside from the personal concerns we may have about this, what is
being done to help create a private sector job? Well, this is not job
creation for families in my district. This is just part of the
majority's continuation of an overreach and expansion of government.
First, it was the $787 billion stimulus that failed to keep
unemployment down, then a national energy tax, then a $1 trillion
government takeover of health care, and now another expansion of
government that will raise costs for consumers and small businesses.
Well, Mr. Speaker, Republicans offered an alternative to this report
that would have ended bailouts, would have addressed too big to fail
and the failures of Fannie Mae and Freddie Mac; but that was rejected.
Congress needs to be focusing on pro-small business policies, policies
that make it easier for banks to lend to job creators that are at the
heart of our communities, job creators that are at the heart of what we
all want, a job-filled recovery instead of a jobless recovery.
Unfortunately, this conference report will do none of these things, and
I urge a ``no'' vote.
{time} 1620
Mr. FRANK of Massachusetts. Mr. Speaker, I yield 2 minutes to my
colleague from Massachusetts (Mr. Capuano), another member of the
committee who has played a major role in this.
Mr. CAPUANO. Mr. Speaker, I will tell you that this bill is one of
the best bills I've ever been involved with in the 12 years I've been
in Congress. Like any bill, it doesn't give me everything that I want.
I don't think anybody would say that, including Mr. Frank. But it is a
bill that moves us back towards thoughtful oversight of the financial
institutions of this country.
For 70 years, from the Glass-Steagall Act until about the 1980s,
1990s, depending what you count, we had the best financial
institutions, the best financial system in the world. Every other
country tried to emulate us.
What happened? Slowly but surely, this country, through its Congress
and its President, decided that we wanted to deregulate everything.
Let's look at nothing, let everything go. What was the result of it? A
financial meltdown. That was in the economic sector. What was the
result of it in the gulf? An oil spill of ultimate proportions.
The concept that government can't regulate has been proven wrong time
and time again. Nobody argues for overregulation. That's a fair
argument. Where is the appropriate line?
In this case, in the financial institutions case, we went years with
loans that nobody knew what the standards were. We went years with
credit rating agencies giving everybody a AAA rating without having a
clue what was behind those papers. We went years with people betting,
literally betting with our money, our pension fund money and other
money that we didn't want to do, on things that didn't exist. They
didn't exist. The result of it was a financial meltdown.
This bill brings us toward a more thoughtful regulatory regime that
will ensure the stability of our economic system. And that's what this
is all about. It's not about raising revenue. It's not about killing
anything.
My district has a very vibrant financial sector and we want to keep
it that way, but I also want be to make sure that it's stable. That's
more important than anything else. This bill accomplishes that, and
that's why we should support it.
Mr. BACHUS. I yield 2 minutes to the gentleman from Florida (Mr.
Putnam).
Mr. PUTNAM. Mr. Speaker, I rise in opposition to the Frank-Dodd bill
that would not reform Wall Street but, instead, create a permanent
taxpayer backstop and fail to provide consumer protection and doesn't
prevent a future crisis.
The permanent bailout would ensure that the Federal Government,
through the FDIC and the Treasury, maintains the ability to use
taxpayer funds to bail out financial institutions deemed too big to
fail. That may be what's important to the D.C. bureaucrats, but to the
community banks and credit unions back home and the communities they
serve, I can assure you it's not. They're treated as too small to save.
Our community banks, our credit unions, our small businesses don't
receive the special treatment accorded to the big guys in this bill.
Instead, they go through the bankruptcy process. Why the double
standard? Why the double standard for our communities? They didn't
cause Wall Street's collapse, and yet they're held to a different
standard. This is harmful to Main Street's small businesses.
The legislation creates an Office of Financial Research to ``monitor,
record, and report on any financial transaction, including consumer
transactions,'' without the consent of the consumer. That's right.
Monitor, record, and report any transaction without your approval.
This new ``Big Brother Bureaucracy'' will be funded through
assessments on financial institutions that trickle down to consumers
through higher fees. According to the CBO, ``The cost of the proposed
fee would ultimately be borne to . . . customers, employees, and
investors.''
The legislation welcomes a new ``Washington Knows Best'' bureau.
Housed within the Federal Reserve, the credit czar will dictate which
financial products can and cannot be made available to consumers and
will have broad authority to set sales practices, limit products, and
mandate compensation. The bureau misses its mark to actually protect
consumers and will, instead, create more barriers to consumers' ability
to obtain credit, to pursue their dreams, to buy a home, to refinance,
or to expand or save their small business.
This conference report, totaling over 2,300 pages, is bad for small
business, and I urge its defeat.
Mr. FRANK of Massachusetts. Mr. Speaker, I yield 1 minute to the
gentleman from Pennsylvania (Mr. Fattah), who gave us an inspiration
for trying to help unemployed people with their mortgages.
Mr. FATTAH. Mr. Speaker, the American people, as always, almost
always, get it right. When they wanted to pick a party that would
finally rein in the abuses of Wall Street, they gave the majority in
the House and the Senate to the Democrats. And you can hear from the
other side that they obviously made the right choice because there's no
willingness to deal with some of these challenges from my colleagues on
the other side.
I want to congratulate Chairman Barney Frank. I met with him over a
year ago about some of the challenges in terms of foreclosures in our
country. In this bill is the result of language that I authored which
replicated a very successful program in Pennsylvania that we believe
will help others throughout the country.
I want to thank my great colleague from California, Congresswoman
Waters, for her efforts to make sure that this was fully engaged by the
committee.
But beyond my proposal that is included in terms of homeowners
assistance, in terms of foreclosures, this is a very good bill in terms
of its regulation of Wall Street, in terms of consumer protection. This
House, I urge and encourage that we vote in favor of the Wall Street
reform bill.
[[Page H5242]]
Mr. BACHUS. I yield 2 minutes to the gentleman from Virginia (Mr.
Cantor), the Republican whip.
Mr. CANTOR. I rise in opposition to this conference report.
Mr. Speaker, the flow of credit and capital throughout the financial
system is the building block of American prosperity. It has enabled
entrepreneurs to pursue their ideas. It has enabled people to balance
their budgets, to achieve a better standard of living. But when
businesses and families cannot access capital from banks, consumers
don't spend, small businesses hunker down, and investment dries up. The
economy simply can't grow jobs.
This legislation is a clear attack on capital formation in America.
It purports to prevent the next financial crisis, but it does so by
vastly expanding the power of the same regulators who failed to stop
the last one.
Dodd-Frank is the product of a tired and discredited philosophy. It's
the notion that you can solve a problem by reflexively piling vast new
layers of bureaucracy, regulatory costs, and taxes on it. And who'll
pay the price? It won't merely be the big banks who the bill's
supporters rail against. Smaller, less-leveraged community banks will
have a more difficult time surviving the regulatory costs. And most
alarming, costs will be passed on to consumers and businesses in the
form of higher prices for credit. We know this because last year's
Credit Card Act is already having just that effect.
Before it was passed, Republicans warned that more government
expansion and more Washington proscription would create additional
costs borne by the consumer. It was common sense, and sure enough, we
were right. In response to that legislation, lending rates were reset
higher as credit became less available. Meanwhile, free checking
accounts are becoming a relic of the past for all but the wealthiest
bank customers.
Republicans agree that the financial system needs a shake-up to bring
transparency and stability. But the fact is, Mr. Speaker, this
legislation does not accomplish this goal. It's bad for private
business. It's bad for families, and I urge my colleagues to vote
``no'' before we do any more damage.
Mr. FRANK of Massachusetts. Mr. Speaker, I yield 4 minutes to the
gentlewoman from California (Ms. Waters), one of the leaders in housing
and matters of fairness in our committee, the chairman of the Housing
Subcommittee.
Ms. WATERS. Mr. Speaker and Members, I am pleased and proud to stand
here today in support of this most significant piece of legislation
that is before this House.
Again, I thank Chairman Frank for his leadership, and I'm especially
proud that this work of the conference committee was done by such a
diverse group on this side of the aisle. I'm especially proud that
members of the conference committee included not only women, but
African Americans and Latinos and Anglos. It was truly diverse, and you
can see that work reflected in what came out of the conference report.
{time} 1630
For example, the CBC members of the Financial Services Committee
worked on a number of these issues over the past several years, and we
came up with those things that had been brought to our attention year
in and year out that are finally paid attention to in the conference
report.
The Federal Insurance Office, we will be asking them to gather
information about the ability of minorities and low-income persons to
access affordable insurance products. To give consideration and
mitigation of the impact of winding down a systemically risky
institution on minorities and low-income communities. The expansion of
the Consumer Financial Protection Bureau's advisory board to include
experts in civil rights, community development, communities impacted by
high-priced loans, and others. And perhaps most importantly, the
establishment of the Offices of Minority and Women Inclusion at each of
the Federal financial services agencies.
These offices would provide for diversity in the employment,
management, and business activities of these agencies. The data for the
need for these offices speaks for itself. Diversity is lacking in the
financial services industry, with the GAO reporting from 1993 to 2004
the level of minority participation in the financial services
professions only increased marginally, from 11 percent to 15.5 percent.
We took care of that in this bill. And now we have the opportunity to
not only give oversight to diversity, but to help these agencies
understand how to do outreach, how to appeal to different communities
so that we can get the kind of employees that will create the diversity
to pay attention to all of the needs of the people of this country.
In addition, Mr. Speaker, I am pleased to note that this conference
report includes a provision that I championed to allow the SEC to issue
rules on proxy access, giving the Nation's pension funds and other
long-term institutional investors a say in the governing of the
companies in which they own stock.
Additionally, I am pleased that this bill addresses foreclosures,
which have single-handedly inflicted tremendous damage on neighborhoods
in my district in California and across the country. It has long been
my position that this bill would be incomplete without directly
addressing the needs of America's homeowners and neighborhoods. That is
why I have fought for an additional $1 billion in funds for the
Neighborhood Stabilization Program, a program whose authorizing
legislation I wrote in 2008. And it is helping neighborhoods all across
this country that have foreclosed properties and rundown properties
that are driving down the price of other homes in that community. Now
we can rehabilitate those properties and keep the values up of the
homes in the neighborhood.
I am also pleased that an additional $1 billion in emergency
assistance for unemployed homeowners was included in this bill. Reports
indicate that 60 percent of individuals seeking help in avoiding
foreclosures are doing so because they are unemployed.
The SPEAKER pro tempore. The time of the gentlewoman has expired.
Mr. FRANK of Massachusetts. I yield the gentlewoman 1 additional
minute.
Ms. WATERS. I thank the chairman.
This funding will provide a critical bridge for homeowners during
periods of joblessness, and allow them to maintain stable housing for
their children. This $2 billion, combined with an additional $6 billion
I have secured for NSP through two rounds of funding, is another step
toward addressing the foreclosure crisis. But more needs to be done.
That is why I am pleased that the Treasury has committed to providing
another $2 billion for unemployed homeowners in addition to the amounts
provided under this bill. And that is why I will continue to fight for
both additional funding and for loss mitigation legislation, which
would make it mandatory for banks to offer real sustainable loan
modification offers.
Chairman Frank, thank you for your assistance, thank you for your
support, thank you for your leadership. I am proud to be a part of this
Congress, so proud to have been a part of the conference committee. And
I think we are doing all Americans justice in this bill as we pay
attention to needs that have been so long overlooked.
Mr. BACHUS. Mr. Speaker, at this time I yield 4 minutes to the
gentleman from California (Mr. Issa), the ranking member of Oversight
and Government Reform.
(Mr. ISSA asked and was given permission to revise and extend his
remarks.)
Mr. ISSA. Mr. Speaker, others will rise and they will talk about the
underlying bill. Although I was on the conference committee, and for 2
weeks Chairman Frank, Ranking Member Bachus and the rest of us were
together, I do not claim and will not claim to be an expert on all the
things that led to the financial meltdown or all the things which will
preclude the next.
I do rise to oppose the Dodd-Frank bill, and I do so because I don't
believe that it will preclude another meltdown and another crisis. I
don't do that because I am an expert on the financial system. I am not.
The people I served with on conference, many of them are. I am not
concerned that the process was not open. I think Chairman Frank allowed
us an unusually great amount of time to be heard. But I am disappointed
that at the end of the day so many things were left out.
[[Page H5243]]
I appreciate Chairman Frank's offering for a separate bill to make up
for the fact that the transparency and data issues that I worked for 2
weeks to put in this bill, because they were rejected by the Senate, we
will have to send them again and hope that the Senate is more
benevolent when we simply ask these agencies to have data standards
that allow for the kinds of transparency among the regulators that will
in fact see reckless behavior ahead of time, or at least allow us to
know the underlying value of assets when the markets begin to melt.
The reckless behavior that led to the meltdown will be debated for
years, but the absence of transparency at the time of the meltdown, an
inability for our regulators, our banks, or anyone else to actually
tell us what the underlying value of various assets were, were in no
small part the result of arcane systems that underlie these very modern
instruments.
You cannot have paper copies sitting in banks to tell you the details
about a loan and then cut it into thousands of pieces, spread it around
the world, and hope that somebody can have confidence in the document
when things start going wrong.
Technology transparency is the most important thing missing from this
bill. I hope to work with the majority and the minority to bring that
in the coming days. I don't do it for my committee. I do it because the
next time there is a hiccup anywhere in the world, even if that's
simply a massive power outage leading to a confidence loss, we need to
have the ability for regulators with confidence to say we have
transparency, we know what these assets are worth, and we can assure
them.
This bill does do a few good things, and I would be remiss if I
didn't mention that the ability for banks to trust each other in
financial transfers of non-interest-bearing large amounts is in no
small part something that will keep the market going if otherwise there
is a lack of confidence in the bank.
I do object to the way this bill is paid for. I believe that it was
inappropriate. And unfortunately, people at the conference were not
willing to consider a real pay-for, not even a real rollback in
unexpended funds that would otherwise be available.
Mr. Speaker, this bill is done. We cannot look to what this will or
won't do. We have to look to the future. Will we do a better job in
data management, in transparency, in creating the tools that would
allow the financial oversight board and the financial industry
regulators to do the job the next time that they didn't do the last
time?
Mr. Speaker, I do not have high confidence that it will be done. I
have high confidence that this body will work together to produce a
bill, send it to the other body, and try, try to get them to understand
that data transparency is essential if we are not going to have another
meltdown.
Mr. FRANK of Massachusetts. I yield 2 minutes to the gentleman from
Florida (Mr. Hastings).
Mr. HASTINGS of Florida. Chairman Frank, I first want to commend you
on an extraordinary effort and your dedicated leadership in bringing
this bill to the floor. I look forward to supporting this legislation.
Before that, however, I would like to clarify a few points as they
pertain to the intent of the bill. It's my understanding that certain
provisions which are intended to improve access to mainstream financial
institutions are not intended to further limit access to credit and
other financial services to the very consumers who are already
underserved by traditional banking institutions.
As you know, each year over 20 million working American families with
depository account relationships at federally insured financial
institutions actively choose alternative sources and lenders to meet
their emergency and short-term credit needs.
{time} 1640
These alternative sources and lenders often offer convenient and less
expensive products and services than the banks where these consumers
have relationships.
Further, as the demands for short-term, small-dollar loans continues
to increase as a result of the current economic environment,
nontraditional lenders have filled the void left by mainstream
financial institutions in many of our Nation's underbanked communities.
Mr. Chairman, I have a longer statement, and with your permission
would skip to the clause that I think is particularly important and
include my full statement in the Record in the interest of time.
Rather, I feel that the financial services should be well-balanced
and carried out in a manner that encourages consumer choice, market
competitions, and strong protections. It is my sincere hope that this
legislation is designed to carefully and fairly police the financial
services industry treating similar products in the short-term credit
market equally while encouraging lending practices that are fair to
consumers.
Is this the intent?
Mr. FRANK of Massachusetts. If the gentleman would yield, first, let
me say that anybody who asks has my permission to skip any statement.
That is an example I am going to try to follow myself sometimes.
Beyond that, I completely agree with the gentleman.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. FRANK of Massachusetts. I yield an additional 15 seconds to the
gentleman.
Mr. HASTINGS of Florida. I yield to the chairman.
Mr. FRANK of Massachusetts. We do want to make sure it's an informed
choice, and we're going to work on financial literacy. But, no, it is
not our intention to deny anybody that choice.
Mr. HASTINGS of Florida. Thank you very much, Mr. Chairman, and I
really commend you for your efforts to pass meaningful financial
regulation reform in this Congress. I deeply thank you.
Mr. BACHUS. Mr. Speaker, at this time I yield 3 minutes to the
gentleman from Texas (Mr. Paul), the ranking member of the Domestic
Monetary Policy Committee.
(Mr. PAUL asked and was given permission to revise and extend his
remarks.)
Mr. PAUL. I thank the gentleman from Alabama for yielding.
Mr. Speaker, I rise in opposition to this piece of legislation. I'm
afraid it is not going to do much to solve our problems. I know it's
very well intended, and it's believed that more regulations will solve
the problems; but, quite frankly, the problems that we're facing come
from a deeply flawed monetary system.
I had made an attempt to emphasize this point by talking about a full
audit of the Federal Reserve, and fortunately this House was strongly
in support of this piece of legislation. There are 320 cosponsors of
this bill. It passed rather easily on the Financial Services Committee,
and then it was put into the House version of this reform package. But
it was removed in conference.
Although there is some attention given to getting more information
from the Fed, it truly doesn't serve as a full audit. If we don't
eventually address the Federal Reserve in depth, we will never fully
understand how financial bubbles are formed and why more regulations
tend to fail. If the financial markets were pleased with what we're
doing here today and the discussion of the last several weeks, they
wouldn't be reeling as they are at this very moment.
So I would say that we should be very cautious in expanding the role
of the regulatory agencies, which does not solve the problem. At the
same time, giving more power to the Federal Reserve doesn't make much
sense if the theory is right that the Federal Reserve is the source of
much of our problems.
Now, some objected to the transparency bill of the Federal Reserve
and said that that was too much information, that the Federal Reserve
had to be totally independent. The Federal Reserve Transparency Act
doesn't do anything about removing transparency. It doesn't change
monetary policy. It just says that the American people and the Congress
have a right to know what they do.
After the crisis hit, the Federal Reserve injected $1.7 trillion and
guaranteed many more trillions of dollars, and it was very hard to get
any information whatsoever. So an ongoing audit to find out exactly
what they do and why they do it, I think, would be a first step to
finding out the relationship of the Federal Reserve system to
[[Page H5244]]
the banking system and the financial community.
Transparency is something the American people have been asking for
and they want. They didn't like the lack of transparency with the TARP
funds; and once the American people found out about what goes on at the
Fed, they want transparency of the Fed.
So fortunately today we will have a chance to vote on this because it
will be in the recommittal motion, and it will give us a chance to put
the language back in, the H.R. 1207, the Federal Reserve Transparency
Act, a chance to audit the Fed. So this will be a perfect opportunity
to emphasize the importance of the Fed and to say that we do need a
full audit.
Mr. FRANK of Massachusetts. I yield 3\1/2\ minutes to the gentleman
from Illinois (Mr. Gutierrez), who's the chairman of the Financial
Institution Subcommittee and has done a great deal of work to improve
our financial situation through this bill.
Mr. GUTIERREZ. Chairman Frank, I want to commend you, first of all,
for your hard work in getting this legislation through Congress and
your dedication to reforming our financial system.
The legislation we have before us takes a multi-pronged approach to
ending the problem of ``too big to fail'' by giving regulators the
tools, only when it is necessary, to decrease the size of financial
institutions, limit their risky behaviors, and wind down systemically
significant firms if they threaten the health of our financial system.
The most direct way to end ``too big to fail'' is to stop firms from
growing too big in the first place. To limit their size and complexity,
this legislation would impose increasingly strict rules on capital
levels and leverage ratios which would limit a firm's risky behavior
and diminish its potential threat to the stability of our financial
system. By implementing a strong Volcker rule and limiting proprietary
trading by insured depository institutions, we minimize a bank's
ability to use subsidized funds for risky trading practices.
Additionally, the Dodd-Frank bill will create a financial stability
oversight council that will be able to force a company, as a last
resort, to divest some of its holdings and shrink its size if the
council determines it poses a risk to the stability of the financial
system. It has tools.
The most important part of this legislation that will help to end
``too big to fail'' is the resolution authority we create to safely
wind down a failed significant firm and to prevent any further bank
bailouts. This legislation ends individual open-bank assistance. Let me
repeat: this legislation ends individual open-bank assistance, meaning
that if the resolution authority, the death panel, the burial panel, is
applied to a bank, it will not be bailed out but allowed to safely fail
and prevent containment from spreading to the markets. Let me repeat
this: no more bailout. We have a funeral fund.
One thing I want to note, though, at every opportunity Democrats have
insisted that banks, the financial institutions, not the taxpayers of
America, pay for this resolution authority, and the Republicans have
said ``no'' every single time. In both the House and the Senate, they
refuse to support a pre-funded funeral fund that would be paid for by
the riskiest and biggest banks. No. The big bankers don't pay. Main
Street has to pay.
Opposition from certain Republican Senators--and I won't mention
their names--forced us to strip the bank assistance from the conference
report just last night. Republicans have sided with big Wall Street
banks at every opportunity. They even opposed an amendment in the
conference to increase the FDIC insurance to help protect people's
hard-earned deposits along with community banks and small businesses.
So let's be clear. Combine this refusal to guarantee that the banks
pay to clean up any future messes that they make with open opposition
to this legislation and it is obvious where the line has been drawn by
Republicans. If it helps Wall Street banks, they favor it; but if it
helps Main Street and regular Americans, they won't vote for it, and we
don't think they will today.
Mr. Speaker, I won't hold my breath for any Republican support of
this historic legislation. But I do urge all of our Members to support
this vital bill.
Mr. BACHUS. I yield myself 15 seconds.
Mr. Speaker, I don't think you would go to a funeral home and lend
the corpse money. So I don't know why you would lend money to a failing
firm. You ought to just go ahead and put them in bankruptcy like we
want to do.
Mr. Speaker, at this time I yield 3 minutes to the gentlelady from
Illinois who's the chairman of the Financial Services Oversight
Committee (Mrs. Biggert).
{time} 1650
Mrs. BIGGERT. I thank the gentleman for yielding.
Mr. Speaker, I rise in opposition to this conference report and the
bill.
In the fall of 2008, our entire financial system and economy were on
the verge of collapse. The $750 billion TARP program was hastily
proposed. I, for one, would never have backed it were it not for the
taxpayer protections--a promise that the taxpayers would be repaid.
This bill flat out breaks that promise to taxpayers. It siphons away
unspent money from the TARP program. Instead of returning it to the
taxpayers or instead of paying down our $13 trillion debt as promised,
it uses the money to pay for new Federal spending.
Contrary to my colleagues' rhetoric, this bill makes bailouts
permanent. Look at section 210N(5) and section 210N(6). These
provisions authorize bureaucrats to bail out the six largest too-big-
to-fail Wall Street firms to the tune of $8 trillion. What you have is
taxpayers footing the bill to pay for failed Wall Street firms. That is
a bailout.
My colleagues on the other side of the aisle claim that this bill
requires that taxpayers be paid back. Yet how in heaven's name can
taxpayers believe that when this very bill breaks the earlier promise
that taxpayers would be paid back for TARP?
This bill also fails to reform Fannie Mae and Freddie Mac, the two
mortgage giants at the center of the housing crisis. Taxpayers have
bailed Fannie and Freddie out to the tune of $150 billion and billions
more to come, but this bill doesn't reform them. It merely calls for a
study, and it fails to include as part of our Federal budget the
trillions in liabilities taxpayers now face because the Federal
Government owns and operates both Fannie and Freddie.
Finally, let's not forget our hidden costs in this bill. Our Midwest
manufacturers had nothing to do with the housing crisis or with the
financial meltdown. Yet this bill requires them to divert trillions of
dollars of working capital to pay for financial transactions, which may
stifle job growth and raise the cost of commodities for American
families.
What is the cost to small businesses? It is job growth. According to
the U.S. Chamber of Commerce, it is taxpayers, small businesses and
consumers as they pick up the tab for new Federal bureaucrats, 355 new
rules, 47 studies, and 74 reports.
In the name of financial reform, we must not stifle job creation by
saddling our small businesses and manufacturers with additional
burdens. We need to get financial reform right so that innovators and
entrepreneurs can secure credit and can expand and create desperately
needed jobs. We need to get reform right, but this bill doesn't pass
the test.
I urge my colleagues to oppose this conference report and bill.
Mr. FRANK of Massachusetts. I yield 1\1/2\ minutes to a very diligent
member of our committee who has fought hard for the manufacturing
interests of this country, the gentleman from Michigan (Mr. Peters).
Mr. PETERS. I thank the chairman for yielding.
Mr. Speaker, the Dodd-Frank Wall Street Reform bill is an historic
piece of legislation that will protect consumers, reduce the risk of
future economic failures, and provide for the increased oversight of
our entire financial system. However, it also strives to protect job-
creating Main Street businesses.
For example, this legislation will, for the first time, bring
transparency and oversight to the currently unregulated $600 trillion
derivatives market. However, because commercial end users, who are
those who use derivatives to hedge legitimate business risks, do not
[[Page H5245]]
pose systemic risk and because they solely use these contracts as a way
to provide consumers with lower cost goods, they are exempted from
clearing and margin requirements.
I offered an amendment that would permanently extend the end user
exemptions for clearing and margin to certain captive finance companies
that use swaps to hedge their interest rate and foreign currency risks
arising from their financing activities. The amendment was narrowly
tailored to ensure that a captive finance company can only qualify for
the exemption if 90 percent of its business derives from financing the
sale or lease of its parent company's manufactured goods.
There is another provision of this bill which provides a 2-year
transition period for affiliates.
I would like to yield to Chairman Frank so he can clarify that what
these two provisions do is provide a limited exemption from clearing
and margin requirements for qualifying captive finance companies and a
2-year transition period for all other captives that would not qualify
for the limited exemption created by the Peters amendment.
Mr. FRANK of Massachusetts. If the gentleman would yield, the answer
is absolutely. He has crafted this very well with our cooperation, and
he has stated this completely accurately.
Mr. BACHUS. Mr. Speaker, I yield 7 minutes to the gentleman from
Oklahoma (Mr. Lucas), who is the ranking member of the Agriculture
Committee, to then yield time to his members.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Alabama?
Without objection, the gentleman from Oklahoma will control 7
minutes.
There was no objection.
Mr. FRANK of Massachusetts. Mr. Speaker, I yield 13 minutes of my
time to the gentleman from Minnesota (Mr. Peterson), the chairman of
the Agriculture Committee, our co-conferee, and ask unanimous consent
that he control that time.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Massachusetts?
There was no objection.
The SPEAKER pro tempore. The Chair recognizes the gentleman from
Minnesota.
Mr. PETERSON. I thank the gentleman for yielding.
Mr. Speaker, I rise today in support of the conference report on H.R.
4173, The Wall Street Reform and Consumer Protection Act.
I want to start by thanking Chairman Frank, who has demonstrated his
great policymaking skills and leadership on this important issue.
The staffs of both the House Agriculture Committee and the Financial
Services Committee have worked closely on this legislation for the past
year, and it is thanks to our efforts that we have a conference
committee report for us today.
One of the bill's key components is title VII, which brings greater
transparency and accountability to derivative markets. When the House
considered financial reform in December, derivatives were one area in
which we had strong bipartisan support. The House produced a very good
product. The Senate's efforts on derivatives went in a very different
direction. As with any legislation with such stark differences,
compromises had to be made.
This comprehensive legislation represents a middle ground between the
House and Senate products. While no one got everything they wanted in
this bill, I think we got a bill that will help prevent another crisis
in the financial markets like the one we experienced in 2008.
The House Agriculture Committee started looking at some of the issues
addressed in this legislation even before evidence of the financial
crisis started to appear. I am pleased that the conference report
contains many of the provisions the House Ag Committee endorsed over
the course of passing three bills on this topic. Let me briefly talk
about some of those provisions.
Our in-depth review of derivative markets began when we experienced
significant price volatility in energy futures markets due to excessive
speculation--first with natural gas and then with crude oil. We all
remember when we had $147 oil. The Ag Committee examined the influx of
new traders in these markets, including hedge funds and index funds,
and we looked at the relationship between what was occurring on
regulated markets and the even larger unregulated over-the-counter
market. This conference report includes the tools we authorized and the
direction to the CFTC to mitigate outrageous price spikes we saw 2
years ago.
The House Agriculture Committee also spent a great deal of time
considering the role of derivatives in the collapse of the financial
markets and debating different approaches to regulating these financial
tools.
In the end, it was the Agriculture Committee, on a bipartisan basis,
that embraced mandatory clearing well before the idea became popular.
Clearing is not only a means to bring greater transparency to the
derivative markets, but it also should reduce the risk that was
prevalent throughout the over-the-counter market. The conference report
closely follows the House approach to mandatory clearing.
In crafting the House bill and the conference report, we focused on
creating a regulatory approach that permits the so-called end users to
continue using derivatives to hedge risks associated with their
underlying businesses, whether it is energy exploration, manufacturing,
or commercial activities. End users did not cause the financial crisis
of 2008. They were actually the victims of it.
Now, that has been of some concern and, frankly, a misinterpretation
of the conference report's language regarding capital and margin
requirements by some who want to portray these requirements as applying
to end users of derivatives. This is patently false.
The section in question governs the regulation of major swap
participants and swap dealers, and its provisions apply only to major
swap participants and swap dealers. Nowhere in this section do we give
regulators any authority to impose capital and margin requirements on
end users. What is going on here is that the Wall Street firms want to
get out of the margin requirements, and they are playing on the fears
of the end users in order to obtain exemptions for themselves.
{time} 1700
One of the sources of financial instability in 2008 was that
derivative traders like AIG did not have the resources to back up their
transactions. If we don't require these major swap participants and
swap dealers to put more backing behind their swap deals, we will only
perpetuate this instability. That is not good for these markets, and it
is certainly not good for end users.
I am confident that after passing this conference report we can go
home to our constituents and say that we have cracked down on Wall
Street and the too-big-to-fail firms that caused the financial crisis.
With that, I urge my colleagues to support the passage of this
conference report.
I reserve the balance of my time.
Mr. LUCAS. Mr. Speaker, I yield myself 3 minutes.
Mr. Speaker, I rise in opposition to this job-killing conference
report. At a time when Congress should be focused on economic
expansion, the majority brings us this conference report, which will
kill jobs and make financial transactions more expensive.
Last December, this Chamber supported a bipartisan effort to bring
transparency and regulation to the over-the-counter derivatives market
while allowing for the management of legitimate risk. It recognized
that mom-and-pop shops on Main Street were not the villains behind the
economic collapse. They did not cause the financial crisis and should
not be treated as if they did.
The derivatives title this Chamber passed reflected the need for
commercial end users to lay off risk so they could offer their products
at reasonable and stable prices. Unfortunately, the Senate decided that
only some industries, only some, were worthy of inexpensive risk
mitigation.
Despite the overwhelming bipartisan support our derivatives language
enjoyed, during a meeting in the dark of night our bipartisan language
was stripped out. A title that we passed by voice vote was only going
to survive if offered as an amendment. So that is
[[Page H5246]]
what my good friend from New Jersey (Mr. Garrett) and I did. As the
conferees from this Chamber, we defended the House position.
Unfortunately, at dawn last Friday, our amendment was defeated on a
party-line vote, stripping away the only remaining protection for end
users. American small businesses were told by the majority they would
be regulated as though they were Wall Street.
A report released yesterday believes the language change by the
majority could cost U.S. companies $1 trillion in capital and liquidity
requirements. This isn't money to pay lavish bonuses; this is money to
pay salaries, fund research and development, and pay construction
loans.
Further analysis of this language concludes that $400 billion would
be needed for collateral for businesses to post with dealer
counterparts to cover the exposure of their existing over-the-counter
derivatives. It is estimated that another $370 billion represents the
additional credit capacity that companies could need to cover future
risk.
Despite the majority's voracious appetite for spending, these are
enormous dollar amounts. Rural America doesn't have the option of
waiving phony PAYGO requirements. These costs are real and the ability
to pay them does not exist. Business will now have to cut spending,
which, simply put, means job losses or hold on at its very own risk,
thereby further concentrating risk.
You know, once upon a time this bill was supposed to avoid risk
concentration. That was once upon a time.
Mr. Speaker, I reserve the balance of my time.
Mr. PETERSON. Mr. Speaker, I yield such time as he may consume to the
gentleman from Pennsylvania (Mr. Holden).
Mr. HOLDEN. I thank the chairman for yielding.
I rise today in support of H.R. 4173.
I serve as chairman of the House Agriculture Subcommittee on
Conservation, Credit, Energy, and Research. As such, we have
jurisdiction over the institutions of the Farm Credit System that serve
agriculture as well as rural communities across the country.
Over 20 years ago, the Agriculture Committee put in place a revised
legislative and regulatory regime for the Farm Credit System that has
successfully stood the test of time in ensuring that these institutions
operate safe and sound.
Farm Credit System institutions are regulated and examined by a fully
empowered independent regulatory agency, the Farm Credit
Administration, which has the authority to shut down and liquidate a
system institution that is not financially viable. In addition, the
Farm Credit System is the only GSE that has a self-funded insurance
program in place that was established to not only protect investors in
farm credit debt securities against loss of their principal and
interest, but also to protect taxpayers.
These are just a few of the reasons why the Agriculture Committee
insisted that the institutions of the Farm Credit System not be subject
to a number of the provisions of this legislation. They were not the
cause of the problem, did not utilize TARP funds, and did not engage in
abusive subprime lending. We have believed that this legislation should
not do anything to disrupt this record of success.
Mr. Speaker, I now would like to enter into a colloquy with the
chairman of the Agriculture Committee.
Mr. Chairman, the conference report includes compromise language that
requires the Commodity Futures Trading Commission to consider exempting
small banks, Farm Credit System institutions and credit unions from
provisions requiring that all swaps be cleared. We understand that
community banks, Farm Credit institutions and credit unions did not
cause the financial crisis that precipitated this legislation. While
the legislation places a special emphasis on institutions with less
than $10 billion in assets, my reading of the language is that they
should not in any way be viewed by the Commodity Futures Trading
Commission as a limit on the size of the institution that should be
considered for an exemption.
Mr. Chairman, would you concur with this assessment?
Mr. PETERSON. Yes, I fully agree. The language says that institutions
to be considered for the exemption shall include those with $10 billion
or less in assets. It is not a firm standard. Some firms with larger
assets could qualify, while some with smaller assets may not. The
regulators will have maximum flexibility when looking at the risk
portfolio of these institutions for consideration of an exemption.
Mr. HOLDEN. I thank the chairman.
Mr. LUCAS. Mr. Chairman, I now yield 2 minutes to the gentleman from
Texas (Mr. Neugebauer), who is a very significant participant on both
the Financial Services Committee and the Agriculture Committee.
Mr. NEUGEBAUER. Mr. Speaker, I rise in strong opposition to this
conference report. Financial regulatory reform is needed, but this
2,300 page bill is the wrong solution for the taxpayers, and it won't
help build strong capital markets needed to fuel growth and new jobs
for our country.
If you liked the bailouts of the last few years, you are going to
love this new financial bill. If you are a consumer who wants fewer
choices, higher costs of credit and new fees, this bill has some great
deals for you.
This bill will vastly expand the powers of the government regulators.
Those are the same regulators who fell short of the job the first time
around, and now they are asking us to trust them and they tell us that
the outcome will be different next time. But the outcome won't be
different, because this bill sets up a permanent bailout regime that
puts the government in charge of picking winners and losers.
Under this bill, if the government says to your company it is too big
and too important to fail, your company gets an implied backing and
serious advantages over its competitors, especially your smallest
competitors. If the government determines a company should be shut
down, the government gets to decide how everyone that does business
with that company is treated, ignoring the rule of law, just like they
did with AIG and the automobile companies behind closed doors.
And if those problems weren't serious enough, now the majority is
playing fast and footloose with the taxpayers. In a move that could
only make Bernie Madoff and Enron proud, the majority is now taking the
unused and paid-back TARP funds that were supposed to pay down the
national debt and double-counting the deposit insurance premiums to pay
for the $19 billion cost of this bill.
American families can't double-count their income from their
paychecks. What kind of accounting is Congress using that will let us
double-count the money?
Mr. Speaker, bills sometimes have good titles but they don't
accomplish what they are supposed to do. There is no real financial
reform in this bill. I wish there was. I want to vote for real
financial reform. But the big losers here are the American people. They
stay at risk. Their choices are going to be limited, because now we are
going to have a new credit czar determine what kind of financial
products that the American people get to look at.
If you want real reform, vote against this bill.
{time} 1710
Mr. PETERSON. Mr. Speaker, I yield such time as he may consume to the
gentleman from Iowa (Mr. Boswell).
Mr. BOSWELL. Mr. Speaker, I would like to engage the chairman in a
colloquy.
I would like to briefly clarify an important point with the chairman
regarding the intention of one of the exclusions from the definition of
``swap.'' The exclusion from the definition of swap for ``any sale of a
nonfinancial commodity or security for deferred shipment or delivery,
so long as the transaction is intended to be physically settled,'' is
intended to be consistent with the forward contract exclusion that is
currently in the Commodity Exchange Act and CFTC's established policy
on this subject. Physical commodity transactions should not be
regulated as swaps as that term is defined in this legislation. This is
true even if commercial parties agree to ``book-out'' their delivery
obligations under a forward contract.
For those who may not be familiar with terminology used in the trade,
a book-out is a second agreement between two commercial parties to a
forward contract who find themselves in a delivery chain or circle at
the same delivery point. They can agree to settle
[[Page H5247]]
their delivery obligations by exchanging a net payment if there has
been some change arising since the initial forward contract was entered
into. Simply put, book-outs reduce transaction costs, and that saves
consumers money.
Can the chairman clarify this for me?
I yield to the chairman.
Mr. PETERSON. The gentleman is correct. My interpretation of the
exclusionary provision from the definition of swap that he mentioned is
that the exclusion would apply to transactions in which the parties'
delivery obligations are booked-out, as the gentleman described. The
fact that the parties may subsequently agree to settle their
obligations with a payment based on a price difference through a book-
out does not turn a forward contract into a swap.
Excluding physical forward contracts, including book-outs, is
consistent with the CFTC's longstanding view that physical forward
contracts in which the parties later agree to book-out their delivery
obligations for commercial convenience are excluded from its
jurisdiction. Nothing in this legislation changes that result with
respect to commercial forward contracts.
Mr. BOSWELL. I thank the chairman for the clarification.
Mr. PETERSON. I thank the gentleman.
I encourage people to support the conference report.
I have no further requests for time, and I yield back the balance of
my time.
Mr. LUCAS. Mr. Speaker, I yield the remaining 2 minutes to the
ranking member on the Small Business Administration Committee and a
very valued member of the Agriculture Committee, the gentleman from
Missouri (Mr. Graves).
Mr. GRAVES of Missouri. Mr. Speaker, everyone agrees it's critical to
restructure the regulatory oversight of our Nation's financial sector
to help prevent future crises. Unfortunately, not only does this
conference report fail to achieve this most basic goal, it also creates
harmful new hurdles for small businesses. As ranking member of the
House Small Business Committee, I cannot support this legislation.
Some of my colleagues are quick to state publicly that small
businesses are going to bring us out of this economic downturn, yet
they turn their backs on small firms and promote policies that severely
hinder their growth. Through this legislation, Congress is once again
ignoring the voice of the entrepreneur.
The conference report includes a massive new government bureaucracy
that supporters claim will protect consumers from overzealous sellers
of credit. However, the breadth of the rulemaking authority is
astounding and will likely affect millions of credit transactions
between small businesses and their customers. Even if the new agency
only controls credit offered by regulated financial institutions, the
additional burdens will raise the cost of credit for small businesses.
Of further concern is the language in the current bill that makes
commercial end users who hedge their exposure to risk susceptible to
unnecessary margin requirements through the use of cash collateral.
Forcing sophisticated end users to increase capital set-asides to cover
margins will ultimately raise the cost of products purchased by small
businesses. Given the state of the economy, raising the costs on small
businesses is one of the worst things that can be done.
The adverse long-term consequences of this legislation is nothing
short of startling. At a time when American small businesses need it
most, this bill may seriously restrict their access to capital.
Additionally, this legislation will negatively affect small business
investment companies from allowing regulators to decide whether these
institutions can obtain capital from banks.
In closing, I strongly urge my colleagues to join me in opposing this
ill-conceived conference report. If Congress expects small businesses
to help turn around the economy, we have got to focus on developing
legislation that helps them do just that.
Mr. BACHUS. Mr. Speaker, can I inquire as to the time left on both
sides?
The SPEAKER pro tempore. The gentleman from Alabama has 21\1/4\
minutes remaining. The gentleman from Massachusetts has 11 minutes
remaining.
Mr. BACHUS. At this time I yield 2 minutes to the gentleman from New
Jersey (Mr. Garrett), who is the ranking member of the Capital Markets
Subcommittee.
Mr. GARRETT of New Jersey. I rise in opposition to this job-killing
continuation of a bailout bill. Earlier, Chairman Frank said he was
astonished by our interpretation this is a bailout bill. Well, what is
even more astonishing is the fact that this is the same chairman who
was here last session leading the efforts in our last bailout bill. And
here he is, once again, leading the effort on this bill for a
continuation of bailout. What is perhaps even more astonishing than
that is that here he stands as the author of the bill, with the 2,300
pages in front of him, holding up and actually reading the bill, and he
fails to see that this underlying piece of legislation continues to
bail out creditors at the expense of U.S. taxpayers.
Just as we saw with the situation of AIG, where the creditors on Wall
Street and the creditors over in China and such areas as that were
bailed out at a hundred percent, we see the same thing possibly going
forward here in this legislation as well. Perhaps that explains to us
all why Wall Street is applauding this bill--because they know that
they will continue to see the bailouts that they saw in the past. So it
is astonishing to see that we're repeating history.
Now, I know the chairman will say, Well, this is not going to happen
because there is the opportunity for receivership. But the chairman
well knows if he looks into the bill that that receivership is not for
a day or two--it's for a year or 2 or 3 or 4 or 5 years that we can
continue to see American taxpayers putting out their money to bail out
these failed, risky institutions.
It seems that at every turn the Democrats who wrote this bill chose
to endow the same failed regulators who failed to foresee the last
crisis with more and more power. At every single turn the Democrats
chose more government bureaucracy and more government outreach into our
economy. And at every turn the Democrats threw up policies that will
kill jobs and restrict credit.
Now, on the one hand, this isn't surprising. We've seen this all
before, when you think about it, whether it was in the area of cap-and-
trade or in health care proposals, among others we saw before.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. BACHUS. Mr. Speaker, I yield the gentleman 1\1/2\ additional
minutes.
Mr. GARRETT of New Jersey. On the other hand, it is disappointing
when you consider the history of the failed efforts in the area of
health care or the failed efforts on the other side in the area of cap-
and-tax that they haven't learned by now from their past mistakes.
Think about it for a moment. Think about what we hear when we go back
to our districts. That the American people are delivering a strong
message to those of us in Washington willing to listen, a message
saying that they do not want a continuation, Mr. Speaker, of the failed
policies that you brought to the floor in the past with your bailouts
of Wall Street. The American people say that they do not want to be on
the hook for the tens--no--the hundreds of billions of dollars to bail
out institutions on Wall Street that made bad risks. They want it to
end now. And they want to end it today. They want less failed
government overage into their lives and into the economy. They do not
want institutions yet again created that can look at every single
transaction that they make, whether it's at the ATM that the government
can now look down into those transactions, whether it's opening up a
credit card account someplace that the Federal Government can now look
into those transactions, whether it's any transaction whatsoever that
you or I make or anyone listening to this speech tonight will be able
to make, because bureaucrats, unelected, unaccountable bureaucrats,
will be able to look into those transactions.
They want less failed government overage into their lives. They want
less intrusions into the economy. What, you ask them, do they want?
They simply want more opportunities--opportunities to work and to
provide for their
[[Page H5248]]
families. And they want those opportunities without pushing our country
into greater debt. Unfortunately, this bill fails on all accounts.
{time} 1720
Mr. FRANK of Massachusetts. I yield 1 minute to my colleague, the
gentleman from Minnesota (Mr. Peterson), the chairman of the
Agriculture Committee.
Mr. PETERSON. Mr. Speaker, I would like to enter into the Record a
letter that Chairman Frank and I received from Chairmen Lincoln and
Dodd on the treatment of end users under the derivatives title of the
bill. As the letter makes clear, we have given the regulators no
authority to impose margin requirements on anyone who is not a swap
dealer or a major swap participant.
While the regulators do have authority over the dealer or MSP side of
a transaction, we expect the level of margin required will be minimal,
in keeping with the greater capital that such dealers and MSPs will be
required to hold. That margin will be important, however, to ensure
that the dealer or major stock participant will be capable of meeting
their obligations to the end users. We need to make sure that they have
that backing.
I would also note that few, if any, end users will be major swap
participants, as we have excluded ``positions held for hedging or
mitigating commercial risk'' from being considered as a ``substantial
position'' under that definition.
I would ask Chairman Frank whether he concurs with my view of the
bill.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. FRANK of Massachusetts. I yield the gentleman 15 additional
seconds.
And the gentleman is absolutely right. We do differentiate between
end users and others. The marginal requirements are not on end users.
They are only on the financial and major swap participants. And they
are permissive. They are not mandatory, and they are going to be done,
I think, with an appropriate touch.
U.S. Senate,
Washington, DC, June 30, 2010.
Hon. Chairman Barney Frank,
Financial Services Committee, House of Representatives,
Rayburn House Office Building, Washington, DC.
Hon. Chairman Collin Peterson,
Committee on Agriculture, House of Representatives, Longworth
House Office Building, Washington, DC.
Dear Chairmen Frank and Peterson: Whether swaps are used by
an airline hedging its fuel costs or a global manufacturing
company hedging interest rate risk, derivatives are an
important tool businesses use to manage costs and market
volatility. This legislation will preserve that tool.
Regulators, namely the Commodity Futures Trading Commission
(CFTC), the Securities and Exchange Commission (SEC), and the
prudential regulators, must not make hedging so costly it
becomes prohibitively expensive for end users to manage their
risk. This letter seeks to provide some additional background
on legislative intent on some, but not all, of the various
sections of Title VII of H.R. 4173, the Dodd-Frank Act.
The legislation does not authorize the regulators to impose
margin on end users, those exempt entities that use swaps to
hedge or mitigate commercial risk. If regulators raise the
costs of end user transactions, they may create more risk. It
is imperative that the regulators do not unnecessarily divert
working capital from our economy into margin accounts, in a
way that would discourage hedging by end users or impair
economic growth.
Again, Congress clearly stated in this bill that the margin
and capital requirements are not to be imposed on end users,
nor can the regulators require clearing for end user trades.
Regulators are charged with establishing rules for the
capital requirements, as well as the margin requirements for
all uncleared trades, but rules may not be set in a way that
requires the imposition of margin requirements on the end
user side of a lawful transaction. In cases where a Swap
Dealer enters into an uncleared swap with an end user, margin
on the dealer side of the transaction should reflect the
counterparty risk of the transaction. Congress strongly
encourages regulators to establish margin requirements for
such swaps or security-based swaps in a manner that is
consistent with the Congressional intent to protect end users
from burdensome costs.
In harmonizing the different approaches taken by the House
and Senate in their respective derivatives titles, a number
of provisions were deleted by the Conference Committee to
avoid redundancy and to streamline the regulatory framework.
However, a consistent Congressional directive throughout all
drafts of this legislation, and in Congressional debate, has
been to protect end users from burdensome costs associated
with margin requirements and mandatory clearing. Accordingly,
changes made in Conference to the section of the bill
regulating capital and margin requirements for Swap Dealers
and Major Swap Participants should not be construed as
changing this important Congressional interest in protecting
end users. In fact, the House offer amending the capital and
margin provisions of Sections 731 and 764 expressly stated
that the strike to the base text was made ``to eliminate
redundancy.'' Capital and margin standards should be set to
mitigate risk in our financial system, not punish those who
are trying to hedge their own commercial risk.
Congress recognized that the individualized credit
arrangements worked out between counterparties in a bilateral
transaction can be important components of business risk
management. That is why Congress specifically mandates that
regulators permit the use of non-cash collateral for
counterparty arrangements with Swap Dealers and Major Swap
Participants to permit flexibility. Mitigating risk is one of
the most important reasons for passing this legislation.
Congress determined that clearing is at the heart of
reform--bringing transactions and counterparties into a
robust, conservative and transparent risk management
framework. Congress also acknowledged that clearing may not
be suitable for every transaction or every counterparty. End
users who hedge their risks may find it challenging to use a
standard derivative contracts to exactly match up their risks
with counterparties willing to purchase their specific
exposures. Standardized derivative contracts may not be
suitable for every transaction. Congress recognized that
imposing the clearing and exchange trading requirement on
commercial end-users could raise transaction costs where
there is a substantial public interest in keeping such costs
low (i.e., to provide consumers with stable, low prices,
promote investment, and create jobs.)
Congress recognized this concern and created a robust end
user clearing exemption for those entities that are using the
swaps market to hedge or mitigate commercial risk. These
entities could be anything ranging from car companies to
airlines or energy companies who produce and distribute power
to farm machinery manufacturers. They also include captive
finance affiliates, finance arms that are hedging in support
of manufacturing or other commercial companies. The end user
exemption also may apply to our smaller financial entities--
credit unions, community banks, and farm credit institutions.
These entities did not get us into this crisis and should not
be punished for Wall Street's excesses. They help to finance
jobs and provide lending for communities all across this
nation. That is why Congress provided regulators the
authority to exempt these institutions.
This is also why we narrowed the scope of the Swap Dealer
and Major Swap Participant definitions. We should not
inadvertently pull in entities that are appropriately
managing their risk. In implementing the Swap Dealer and
Major Swap Participant provisions, Congress expects the
regulators to maintain through rulemaking that the definition
of Major Swap Participant does not capture companies simply
because they use swaps to hedge risk in their ordinary course
of business. Congress does not intend to regulate end-users
as Major Swap Participants or Swap Dealers just because they
use swaps to hedge or manage the commercial risks associated
with their business. For example, the Major Swap Participant
and Swap Dealer definitions are not intended to include an
electric or gas utility that purchases commodities that are
used either as a source of fuel to produce electricity or to
supply gas to retail customers and that uses swaps to hedge
or manage the commercial risks associated with its business.
Congress incorporated a de minimis exception to the Swap
Dealer definition to ensure that smaller institutions that
are responsibly managing their commercial risk are not
inadvertently pulled into additional regulation.
Just as Congress has heard the end user community,
regulators must carefully take into consideration the impact
of regulation and capital and margin on these entities.
It is also imperative that regulators do not assume that
all over-the-counter transactions share the same risk
profile. While uncleared swaps should be looked at closely,
regulators must carefully analyze the risk associated with
cleared and uncleared swaps and apply that analysis when
setting capital standards for Swap Dealers and Major Swap
Participants. As regulators set capital and margin standards
on Swap Dealers or Major Swap Participants, they must set the
appropriate standards relative to the risks associated with
trading. Regulators must carefully consider the potential
burdens that Swap Dealers and Major Swap Participants may
impose on end user counterparties--especially if those
requirements will discourage the use of swaps by end users or
harm economic growth. Regulators should seek to impose
margins to the extent they are necessary to ensure the safety
and soundness of the Swap Dealers and Major Swap
Participants.
Congress determined that end users must be empowered in
their counterparty relationships, especially relationships
with swap dealers. This is why Congress explicitly gave to
end users the option to clear swaps contracts, the option to
choose their clearinghouse or clearing agency, and the option
to segregate margin with an independent 3rd party custodian.
[[Page H5249]]
In implementing the derivatives title, Congress encourages
the CFTC to clarify through rulemaking that the exclusion
from the definition of swap for ``any sale of a nonfinancial
commodity or security for deferred shipment or delivery, so
long as the transaction is intended to be physically
settled'' is intended to be consistent with the forward
contract exclusion that is currently in the Commodity
Exchange Act and the CFTC's established policy and orders on
this subject, including situations where commercial parties
agree to ``book-out'' their physical delivery obligations
under a forward contract.
Congress recognized that the capital and margin
requirements in this bill could have an impact on swaps
contracts currently in existence. For this reason, we
provided legal certainty to those contracts currently in
existence, providing that no contract could be terminated,
renegotiated, modified, amended, or supplemented (unless
otherwise specified in the contract) based on the
implementation of any requirement in this Act, including
requirements on Swap Dealers and Major Swap Participants. It
is imperative that we provide certainty to these existing
contracts for the sake of our economy and financial system.
Regulators must carefully follow Congressional intent in
implementing this bill. While Congress may not have the
expertise to set specific standards, we have laid out our
criteria and guidelines for implementing reform. It is
imperative that these standards are not punitive to the end
users, that we encourage the management of commercial risk,
and that we build a strong but responsive framework for
regulating the derivatives market.
Sincerely,
Chairman Christopher Dodd,
Senate Committee on Banking, Housing, and Urban Affairs,
U.S. Senate.
Chairman Blanche Lincoln,
Senate Committee on Agriculture, Nutrition, and Forestry,
U.S. Senate.
Mr. BACHUS. At this time I yield 4 minutes to the gentleman from
California (Mr. Royce), a senior member of the committee.
Mr. ROYCE. Mr. Speaker, yesterday a small community banker in Ohio by
the name of Sarah Wallace wrote a letter. She wrote about what she
believed will be the end of community banking as we know it. And Sarah
Wallace notes, in her words: ``Going forward, we will no longer be able
to evaluate loan applications based solely on the creditworthiness of
the borrower. We will be making regulation compliance decisions instead
of credit decisions.''
And this gets to the heart of the issue with the underlying
legislation that we're discussing. Despite the fact that every failed
financial firm had some type of Federal regulator overseeing it, the
answer put forward in this bill is to give broad, largely undefined
powers to those regulators and not, by the way, in the interest of
safety and soundness. If the objective was safety and soundness, the
amendment that I put forward to allow the safety and soundness
regulator to overrule the Consumer Financial Protection Bureau in cases
where safety and soundness was at stake, that would have been upheld.
No, that's not the goal here.
And to get back to the point that Sarah Wallace makes, her
observation is that instead of focusing on providing credit and
providing the best possible service to the customers in these small
towns that need that credit, these institutions will instead focus
their efforts on appeasing the Federal Government and on appeasing
their allies in Congress.
Well, why should that give us concern? It should worry us because
whether it is striving toward another altruistic goal, such as
Congress' interest in subsidizing housing--and by the way, that's what
happened during the housing crisis--or whether it's funneling cash into
friendly community activist organizations, like ACORN, the fact is, the
closer big government gets to business, the more likely these favors
will become the rule instead of the exception.
What I don't like about this is the political pull that comes out of
it. What I don't like about it is the market discipline being replaced.
And I think on a massive scale, this bill replaces objectivity with
subjectivity. It replaces the market discipline on Main Street with
political pull in Washington, and regulators will now decide which
firms will be treated differently and, therefore, moved through the
resolution process and which firms should be left to the bankruptcy
courts.
Why would we care about that in terms of these big firms having this
ability now to have this alternative means of resolution? Well, once in
the resolution process, the government will have the authority to
provide a 100 percent bailout to whichever creditor it favors while
imposing severe losses on other institutions who bought the exact same
bonds. Should we be concerned about abuse in this respect? I think so,
because this type of bureaucratic discretion has led to abuse in the
past.
We have already seen that abuse in the Obama administration's
handling of the Chrysler bankruptcy last year. Secured creditors,
typically entitled to first priority payment under the absolute
priority rule, ended up receiving less than the union allies of the
administration who held junior creditor claims. The fact that the
regulatory reform approach injects politics into the process ensures
this kind of favoritism in the future.
Mr. FRANK of Massachusetts. Mr. Speaker, I yield 1 minute to the
gentleman from Maryland (Mr. Hoyer), the majority leader.
Mr. HOYER. I thank the chairman for yielding, and I congratulate the
chairman for the extraordinary work he has done. I thank Mr. Bachus
too, who is, I think, one of the really responsible leaders in the
minority in terms of issues of substance. And when there are
differences, they are honest differences.
Mr. Speaker, I come to the floor, and when I do, I hear portions of
the debate, sometimes not all of the debate. I want to make an
observation, though. I listened to the gentleman from New Jersey, and
he remarked on what the people were saying. And I think that, frankly,
his remarks reflected the difference in the perspective between the two
parties.
Indeed, that perspective has been reflected in my three decades here,
under Mr. Reagan and others who have served as President and lastly
with Mr. Bush, Mr. Obama's immediate predecessor. And that perspective
was, if the regulators would simply get out of the way, things would be
fine. Mr. Royce indicates that the market will take care of things.
``The market will discipline itself,'' he said. Phil Gramm said that
with respect to the derivatives.
Unfortunately, I voted for that bill that Mr. Gramm was for. I made a
mistake. Brooksley Born was correct. The market did not discipline
itself. In fact, the market took extraordinarily irresponsible steps.
What I hear, I tell my friend from New Jersey, the people saying is,
Don't let the big guys trample on us. Don't let the big guys put us at
great risk. Don't let the big guys make decisions that they take the
risk and we take the loss. That's what I hear the people saying, and
that's what I think this bill is designed to respond to.
This week Mr. Boehner compared reforming Wall Street to killing an
ant with a nuclear weapon. Well, that may sound colorful, but this is
the greatest economic crisis that any of us--I'm looking around on this
floor--have experienced in our lifetimes. And I am closer to
experiencing the last one than any of you, I think, on the floor are.
But none of us, even at my advanced age, were alive during the Great
Depression. So this is the first time that we have experienced such a
deep, deep recession.
But I will tell you, the 8 million Americans whose jobs it took away
think it was a mighty big ant that squashed them and their families, or
the millions more who saw their savings devastated or the families in
every one of our districts who have lost their homes. They're thinking
to themselves, Mr. Boehner, that was a mighty big ant that came my way.
And not to more than half of the Nation's working adults who report
that they have been pushed by the recession into ``unemployment, pay
cuts, reduced hours at work or part-time jobs,'' according to a Pew
Research Center Survey reported in today's Washington Post.
{time} 1730
Now, some of you may think that was an ant that walked through here,
but some think it was a pretty big elephant. It squashed them and hurt
them.
I don't mean an elephant in the symbol of your party, a respected
animal with a long memory.
[[Page H5250]]
But we have differences, and the differences are, as I've said
before, that you perceive regulation as harmful.
My analogy is, if you take the referee off the football field, I
guarantee the split end's going to leave early. He's going to try to
get an advantage. And I guarantee the little guys on the field are
going to get trampled on by the big guys because there's no referee to
say, Time out. You broke the rules.
This bill is about putting the referee back on the field and saying,
Obey the rules. Do not trample on the little people. Don't take risks
that you will expect them to pay for.
More than half, Mr. Speaker, of today's families have been affected.
There is no way to overstate what happened to them, and there is no
mistaking the cause of the crisis: The Wall Street culture of reckless
gambling, and a culture of regulatory neglect that the last
administration wants to perpetuate it, and some want to return to.
I simply think that would be a mistake. I tell my friend from New
Jersey, the people I talk to think it would be a mistake as well. They
don't like what's happened. They don't want it to happen again, and
this is an effort to make sure that's the case.
Never again. Never again should Wall Street greed bring such
suffering to our country. And never again should Washington stand by as
that greed manifests itself as irresponsible risk taking where a few
share the profits, but Main Street bears the brunt of Wall Street's
lost bets.
Now, let me say that I voted for that bill--I was wrong--the Gramm
bill that said Brooksley Born was wrong, we didn't need to regulate
derivatives. And by the way, there were a number of Democrat leaders
who said that as well, that we didn't need to, and Mr. Greenspan said
it as well. He's admitted he made a mistake, and he was distressed by
that mistake.
Now, we can't erase that crisis, but we can work to rebuild what we
lost. As Democrats have done every time, we've supported job creation,
from the Recovery Act to ``Cash for Clunkers'' to the HIRE Act to the
additional tax relief for small businesses, that's, frankly, been
obstructed by the minority party in the other body who have made a
high-stakes political bet on recovery's failure. That would be a shame.
We can also, just as any responsible family would, ensure ourselves
against a repeat crisis and protect America's jobs from another
devastating collapse. The Wall Street Reform and Consumer Protection
Act, which Mr. Frank and Mr. Dodd have led to this point, means an end
to the irresponsible practices of the big banks.
And I want to say the community banks, which I think Mr. Royce
referred to, he's absolutely right. They were not the problem, none of
our community banks. They, frankly, cared that people could pay their
money back, and they were careful in giving loans and careful in making
sure that people to whom they gave loans could pay them back.
It was those who securitized them, that put them in these big, fancy
documents, that didn't care whether they could pay them back because,
for the most part, they made their money on the transaction, not on the
long-term responsibility of the debtor.
I'm happy that among our financial institutions there are responsible
actors who appreciate effective oversight and understand that it
stimulates investment, enterprise, entrepreneurship, and job creation.
Why? Because people can trust the system because they know the referee
is on the field watching, and they know, therefore, the game will be
honest.
No bill, of course, can create an economy without risk, nor should
it. But this bill will bring accountability to Wall Street and
Washington, protect and empower consumers, forestall future financial
meltdowns, and prevent taxpayer money from being put on the line again
to bail out Wall Street excess.
I want to say to my friend who mentioned that we bailed out Wall
Street, how quickly you forget that it was President Bush and Secretary
Paulson and Ben Bernanke, appointed as Chair of the Federal Reserve by
President Bush, that asked for that bill; and that your leadership, for
the most part, supported and urged its adoption. So, with all due
respect, it was President Bush's administration that asked for that
bailout, not Democrats.
What Democrats did, when they said there was a crisis, acted in a
bipartisan way to respond to that crisis. And, very frankly, I think we
precluded a depression.
Americans have an obligation of responsible borrowing, but financial
companies also have responsibilities to make loans fair and
transparent. By creating a Consumer Financial Protection Bureau, we can
make sure that both sides live up to that bargain.
The Consumer Financial Protection Bureau will strengthen and
modernize oversight of Wall Street by putting the functions of seven
different agencies in one accountable place. It seems to me that that
would appeal to people who want not so much proliferation of various
agencies crossing one another.
In addition, corporations like AIG and Lehman Brothers will no longer
be able to make the kind of gambles that risk the health of our entire
economy and, indeed, the world's. Institutions that place the biggest
economic bets will be required to keep capital on hand to meet their
obligations, should those bets fail, and not expect the taxpayer to do
that.
This bill also reduces the conflicts of interest that allowed credit
rating agencies to wrongfully declare such institutions in good health
long after they were dangerously overloaded. Of course, the regulators
weren't watching. There was a philosophy, of course, that regulation
got in the way.
And it prudently regulates the inherently dangerous derivatives that
Warren Buffett called, and I quote, ``weapons of financial mass
destruction'' for the ability to bring down entire economies when bets
go bad.
Should a major firm still find itself on the verge of collapse, this
bill insulates the rest of the economy and keeps taxpayers off the
hook, off the hook for any future bailouts.
Mr. Speaker, a tremendous amount of irresponsibility in Washington
and on Wall Street went into the crisis from which we are still
struggling to recover. That crisis, of course, started in December
2007. Actually, it started long before that, as I said, in the late
nineties. Middle class families who worked hard and played by the rules
overwhelmingly paid the price.
But there's a kind of irresponsibility even worse, failure to learn.
We know what greed and neglect can do. None of us can plead ignorance.
Let's show, Mr. Speaker, ladies and gentlemen of this House, that
we've learned something from the crisis. Let's keep it from happening
again. That is, I tell my friend, what I hear from my constituents.
They want to have us stop it from happening again. They're angry about
it. I'm angry about it. I'm sure that the ladies and gentlemen on both
sides of the aisle are angry about it. This is an opportunity to
ensure, to the extent we possibly can, that this tragedy to so many
millions of families does not happen again.
Mr. GARRETT of New Jersey. Will the gentleman yield for a question?
Mr. HOYER. I yield to my friend.
Mr. GARRETT of New Jersey. I thank the gentleman, and I appreciate
the gentleman's comments.
Would the gentleman just agree with this statement, though, that
neither I nor, I think, anyone on our side of the aisle take the view
that we want no regulation, that we are proposing no reform; that,
actually, we have presented a proposal for reform, prior, to the
administration, that we do believe we need some reform differing in
approach and an approach that we and some believe would end the
perpetual bailouts? Would you agree that we just come from a different
perspective and just want to have a different proposal?
Mr. HOYER. Reclaiming my time, I thank the gentleman for his
question.
As I said at the outset, I do believe we come from a different place.
And I do believe it is accurate to state that all of the Republican
Presidents who have served during the time that I have served have
advanced the proposition that regulation at the Federal level was
overburdensome and it ought to be reduced.
Certainly, we ought to reduce regulation that is neither effective
and is intrusive to the growth of our economy and to the effective
operation of businesses. But with respect to that, I say to my friend,
I think what we saw during the last decade was an excessive
[[Page H5251]]
commitment, as Mr. Greenspan pointed out, to the proposition, as Mr.
Royce stated, Just get out of the way; they will discipline themselves.
{time} 1740
Frankly, the split end that leaves 2 seconds early because the
referee is not on the field is not a bad person. He is trying to get an
advantage. And that's the difference I think between our perspectives.
I understand that difference of the perspectives, so I agree with you
that we do have a difference in perspective. I believe this strikes the
right balance.
And I yield to my friend the chairman.
Mr. FRANK of Massachusetts. I would just say to the gentleman from
New Jersey, I can only judge by what I see. When the House voted on
this bill last December, the minority had certain amendments made in
order by the rules, not as many as they would have liked or as I would
have liked, but in the end they had the motion to recommit, over which
they had complete editorial control. The motion to recommit on this
version of this bill that passed the House last December from the
minority said no regulation, no reform of regulation.
It had one provision. It said kill everything in the bill. It didn't
say do it differently. It didn't amend it. It didn't change it. It said
do not change anything. Do not reform anything except end the TARP,
which thanks to the Senate we are now doing in this bill.
So I can only judge by what I see. When the gentleman says that, when
the minority had a chance to offer their own version of this, they
offered a version that said no, no reform, no change, no regulation,
leave the status quo.
Mr. HOYER. Reclaiming my time, and I will now leave the stage after a
little more than my minute, I will say to my friend that the chairman's
answer, I think, reflects my view of our different perspectives.
Mr. BACHUS. Mr. Speaker, at this time I yield 5 minutes to the
gentleman from Texas (Mr. Hensarling), the ranking member on the
Financial Institutions Subcommittee.
Mr. HENSARLING. I thank the gentleman for yielding.
Mr. Speaker, the cause of our financial crisis is really Federal
policy that strong-armed, that cajoled, that facilitated financial
institutions to loan money to people to buy homes who couldn't afford
to keep them, and people who decided to buy more home than they could
afford and now expect their neighbors who didn't to bail them out.
I mean, Mr. Speaker, it's not a matter of deregulation; it was a
matter of dumb regulation. And there was no dumber regulation than that
which created the government-sponsored enterprises, and gave them an
affordable housing mission, and ended up buying the lion's share of
troubled mortgages, or insuring the troubled mortgages in the system.
Again, it wasn't deregulation; it was dumb regulation. And all this
bill before us does is perpetuate the same dumb regulations that got us
into this financial pickle in the first place.
The bill before us doesn't go to the root cause. It leaves the
government-sponsored enterprises, which represent among other things
the mother of all taxpayer bailouts, $147 billion and counting, with $1
trillion of taxpayer exposure. They are left in place. Amendments
Republicans offered to reform the government-sponsored enterprises, no,
those are somehow out of order. Amendments that would have put them on
budget, no, those are somehow out of order.
And in fact, an amendment--there is only one little study in this.
There are lots of studies; only one study dedicated to the government-
sponsored enterprises. An amendment that would have ensured the study
at least try to figure out how to make the taxpayer whole, the
Democrats voted that down. They are even scared of a study that would
somehow try to make the taxpayers whole.
Instead, what does this bill do, Mr. Speaker? It creates a permanent
bailout authority. There is only one reason to have a bailout
authority, and that's for bailouts. If you want more taxpayer-funded
bailouts, this is the bill for you. To paraphrase a line from the old
Kevin Costner movie ``Field of Dreams,'' If you build it, they will
come. That's the whole reason to have a bailout authority.
The Federal Government can lend to failing firms. They can purchase
the assets of failing firms. The Federal Government can guarantee the
obligations of failing firms. The Federal Government can take a
security interest in the assets of failing firms. This is a bailout
authority. The big will get bigger, the small will get smaller, the
taxpayer will get poorer.
Now, I know our friends on the other side of the aisle continue to
say, well, the taxpayer's not going to have to pay anything. Well, the
Congressional Budget Office, headed by a Democrat, they seem to differ.
I have a copy of their analysis of the bill dated June 28. ``CBO
estimates that enacting the legislation would increase direct spending
by $26.9 billion. Most of that amount would result from provisions that
would establish a program for resolving certain financial firms that
are insolvent or in danger of becoming insolvent.'' Now, they are
notorious for low-balling these estimates, but even they say that
ultimately taxpayers will be called upon for this bailout authority.
Mr. Speaker, the best way to end taxpayer bailouts of failing firms
is to end taxpayer bailouts of failing firms. And that's really the
choice presented before us. Bankruptcy versus bailouts for failed Wall
Street firms. The Democrats obviously choose bailouts.
Second of all, Mr. Speaker, this is a job killer, pure and simple a
job killer. It creates a new Federal institution to ban and ration
consumer credit. The Chamber of Commerce, representing Main Street not
Wall Street, estimates this will increase consumer interest 1.6 percent
and that 4.3 percent fewer new jobs will be created.
I hear from community bankers in my district. Cad Williams, East
Texas National Bank: ``If I have more compliance costs, and the Federal
Government is going to limit the types of customized credit products I
can offer, we will lose jobs in Anderson County, Texas.''
I hear from constituents. Small businessman Tim Ratcliff of Combine,
Texas: ``I own a small business. I am a distributor for promotional
products that come from suppliers all over the country. Without easy,
reliable access to that credit, I am out of business.''
Mr. Speaker, again, this is a job killer. I haven't even talked about
the huge new expansion of government within this bill. This should be
defeated.
Mr. FRANK of Massachusetts. I yield 1 minute to the Speaker of the
House.
Ms. PELOSI. I commend the gentleman for his great leadership, and I
thank him for yielding time.
Mr. Speaker, as I listened to the debate here, I can't help but
remember, and I have a vivid memory of it, a couple of years ago,
almost 2 years ago, September 18, a Thursday afternoon, we were
gathered in our office, and had just seen in the week and a half
preceding, a week and a half to 2 weeks preceding that day, some
unusual events that related to Lehman Brothers, Merrill Lynch, and then
AIG and the Fed bailout of AIG.
I called the Secretary of the Treasury and said, We are meeting here
in my office, and wondered if we could be helpful in any way in terms
of public policy, because what we seem to see coming out from the
executive branch is chaos. Different responses to different challenges
that were not adding up to us. Could you, Mr. Secretary, come to the
Congress tomorrow and give us a report on what is happening? And I said
could you be here at 9 o'clock tomorrow morning to tell us what is
happening to the markets? Secretary Paulson said, ``Madam Speaker,
tomorrow morning will be too late.'' Tomorrow morning will be too late.
``Why, Mr. Secretary, have you not notified Congress? Why have you not
called us sooner? Why would it take a call from me to ask you to report
to us to tell us that tomorrow morning will be too late?''
Without going into his response, which I am happy to do, but in the
interests of time I won't now, I then called the Chairman of the Fed,
Chairman Bernanke, and asked him to join the Secretary of the Treasury
at my office later that day.
The meeting turned into a meeting that was House and Senate,
Democrats and Republicans gathered together to hear from the Secretary
of the Treasury the condition of the markets. The
[[Page H5252]]
Secretary, who had told us that we couldn't even wait until the next
morning, described a very, very grim situation.
{time} 1750
The chairman of the Fed, who was an expert on the Great Depression,
told us that the situation was so grim that if we did not act
immediately, there would be no economy by Monday. This is Thursday
night. There would be no economy by Monday. How could it be? We, the
greatest country in the world with the strongest economy, yet we needed
to act immediately.
The response from the Bush administration was a bailout of the banks.
And at a 24-hour/48-hour period they produced a bill, $700 billion,
that they asked the Congress to pass to bail out the banks. It was
necessary to do because of the recklessness of the Bush
administration's economic policy, because of the lack of supervision,
discipline, regulation. The recklessness on Wall Street had taken us to
the brink of a financial crisis of such magnitude that the chairman
said there wouldn't be an economy by Monday.
Took us into deep recession where 8\1/2\ million jobs were lost.
People lost their jobs, therefore in many cases their health insurance.
They lost their pensions, they lost their savings, they had to live off
savings, and they lost their investments for their children's
education. Because of recklessness on Wall Street, joblessness was
rampant on Main Street.
One of the reasons was there was no credit. It's interesting to hear
my colleagues talk about the importance of credit to Main Street, but
not one of them voted for the Small Business Credit bill that passed in
this Congress about a week ago.
But in any event, joblessness, lack of credit, suppressing the
entrepreneurial spirit of the United States of America, because there
were some, not all, but some on Wall Street who decided it was okay to
privatize the game as long as they were making money and nationalize
the risk. Send the bill to the taxpayer when they were not. That's why
we are here today to make sure that never happens again, to say to them
that the party is now over.
And it's interesting to note that in that message, not one Republican
participated when this bill came to the floor originally. And that was
the end of last year. Years of allowing Wall Street to do anything it
wants, beyond laissez faire, to be overleveraged, no transparency, no
accountability, produce the most severe financial crisis and economic
downturn since the Great Depression--and the American people paid the
price.
Again, 8 million jobs, nearly $17 trillion in net worth disappeared.
A record number of foreclosures ravaged our communities. And, again,
credit disappeared from small businesses. This also had a tremendous
impact on construction in our country because of the lack of loans.
Today, I rise with the clear message that the party is over. No
longer again will recklessness on Wall Street cause joblessness on Main
Street. No longer will the risky behavior of a few threaten the
financial stability of our families, our businesses, and our economy as
a whole.
The Wall Street Reform and Consumer Protection Act has been
appropriately named for Chairman Dodd and Chairman Frank, and I thank
them for their leadership. In doing so, in bringing this legislation
before the Congress, Chairman Frank and Chairman Dodd are making
history. For decades to come their names will be identified with
historic reforms to protect the economy of our country and the
financial and economic security of the American people.
I also want to acknowledge Chairman Collin Peterson who carefully
negotiated some of the most contentious positions of this legislation
working with Chairwoman Lincoln on the Senate side. All of the
Democratic conferees, I thank you for your commitment for making the
strongest bill possible and for always putting America's consumers
first.
Today we will follow the lead of those on the committee enacting
historic legislation to bring transparency to our financial markets,
lowering the leverage that got us into this trouble in the first place,
bringing tough oversight to Wall Street, and bringing consumer
protection to Main Street and to the American people.
By voting ``yes,'' we will pass the toughest set of Wall Street
reforms in generations. This comprehensive and far-reaching legislation
injects transparency and accountability as it lowers leverage and to
the financial system run amok under the Republicans' reckless economic
policies.
This legislation makes commonsense reforms that end the era of
taxpayer bailouts and ``too big to fail'' financial firms. It
establishes a new independent agency solely dedicated to protecting
Americans from anticonsumer abuses. The bill closes the door on
predatory lending and regulates payday lenders. It includes provisions
to allow us to conduct oversight over the Fed, establishes tough rules
for risky financial practices, enhances oversight for credit rating
agencies, and reins in egregious CEO bonuses by giving shareholders a
say on executive pay.
It sheds light on the darkest corners of the derivatives market and
is fully paid for. And how is it paid for? By shutting down the Bush-
era bailout fund known as the TARP and using the savings for financial
reform.
As we cast our votes today, each Member of this body faces a choice.
We have had these choices before. Democrats wanted to rein in health
insurance companies; the Republicans said no. Democrats wanted to rein
in Big Oil; the Republicans said no. Democrats want to rein in the
recklessness of some on Wall Street; the Republicans are saying no.
Each Member of this body will have a choice. We can place our bet on
the side of those on Wall Street who have gambled with our savings and
lost, or we can stand with Main Street and the middle class. Will we
preserve a status quo? And if this bill were to fail, we would be
preserving a status quo that has left our economy in a wretched state.
Or will we guarantee the American people strong reforms and effective
vigilance to prevent another financial crisis?
How can we possibly resist the change that must happen? How can we
forget that the chairman of the Fed said if we do not act, we will not
have an economy by Monday--4 days from when we were having the
conversation? How can we let the status quo that created that condition
to continue?
I urge my colleagues to choose on the side of Main Street. I urge you
to build a future of stability and security for America's families,
consumers, and small businesses. I urge you to vote ``aye'' on the
Dodd-Frank Wall Street Reform and Consumer Protection Act.
Mr. BACHUS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I hear two people that I know are leaders of the
majority; and they each, Mr. Hoyer and Ms. Pelosi, I know they appear
to be sincere when they say that never again will the American people
be asked to bail out those on Wall Street who made reckless deals; no
longer will the taxpayer be put on the hook.
{time} 1800
Yet there is an inconvenient truth here for my Democratic friends,
and that is the clear wording of the bill. I mean I think it is
elementary that before we pass legislation that we read it. I would not
repeat this except that my colleagues in the majority continue to say
time after time after time that there is no bailout, and there is.
There is an AIG-style bailout. Now, AIG cannot be saved under this
legislation. In fact, we changed that, and we both insisted in a
bipartisan way that the AIGs of today will not survive. They will not
survive under this bill. AIG, under this bill--and in bipartisan way we
agree--failed. We say we put the AIGs into bankruptcy, and they are
resolved in that way. My Democrat colleagues say that an AIG-like
failing company will be put in an FDIC supervised resolution authority.
Now, Mr. Frank is correct when he says, Wait a minute. Wait a minute.
This only occurs when these firms are being placed in liquidation. They
are being liquidated.
Well, now, I agree with him, but is there no bailout of anyone on
Wall Street? Well, of course there is. It is a very expensive bailout.
In the Dodd-Frank bill, it is section 204D(1-6). I mean, go write
this down. Go and read it. It says that the FDIC can, one, lend to a
failing firm; two, purchase the assets of a failing firm; three,
guarantee the obligation of a
[[Page H5253]]
failing firm; four, take a security interest in the assets of a failing
firm; five, and/or sell the assets that the FDIC has acquired from the
failing firm.
Why would you lend a failing firm money? I keep asking that. The
second thing is: Where is the bailout fund in this bill?
There is no bailout fund in this bill. There is $19 billion that is
assessed towards community banks. They are FDIC assessments that are
raised, which are about $9 billion, and there is the TARP program that
ended 3 months sooner than it should have. We were told somehow,
because we were not going to start any new programs in that 3 months,
that somehow--hocus-pocus--it saves us about $10 billion. It is hocus-
pocus because you cannot spend the money on the new programs in this
bill and then turn around and suddenly pull out of a hat that same
money and give it back to the taxpayers. It just doesn't happen.
Also, Speaker Pelosi may forget that one of the first signs of
trouble was not in September of 2008 but in July of 2008 when we
suddenly realized that Fannie and Freddie were insolvent and that many
of our banks, almost all of our banks, had major positions in their
shares. Why did they have major positions in the shares of Fannie and
Freddie? They lost all of that money because the government had said,
If you'll invest in that, we'll give you a special rating, and we'll
count it as the same as treasuries. It disappeared overnight.
Now, that was in July, not in September. Banks took a hit on that.
The Democrats said at that time--and the Bush administration and
Secretary Paulson--we've got to give $400 billion to Fannie and Freddie
because, in 1999, under the Clinton administration, you said let's loan
to people with poor credit; let's loan to people without much of a
downpayment. Republicans and Democrats both rushed to use this as a
source of cheap money, and it failed.
Republicans said--and still say and say as this bill is on the
floor--wait a minute. You're going to reform these companies before you
pour taxpayer dollars in them. Every Republican in the House voted, no,
we will not give them taxpayer money until they are reformed and there
is a plan to liquidate them.
The chairman says we need to liquidate them. What about Fannie and
Freddie? Why aren't we liquidating them? We're not. The biggest bailout
that we've had is of Fannie and Freddie. Who did we bail out? Did we
bail out the banks that had shares? No, we bailed out the Chinese
bondholders. Secretary Paulson said, You know what? The Chinese might
not lend us any money.
Let me tell you that we'll sure need the Chinese to lend us money if
this bill passes, because there is a derivatives section in here.
Now, we have a letter that Chairman Peterson produced, which said
this doesn't affect end users, but it's a letter. The truth is we were
in conference last week when we fought this out, and we voted for an
exemption for end users. The Democrats voted against one. We've been
told in the past 48 hours, 72 hours, by groups like the International
Swap and Derivatives Association that this bill will cost businesses $1
trillion. $1 trillion. That is capital. It doesn't matter whether they
trade on the derivatives or if someone does it for them. Someone has to
post that capital, and that goes through and is an expense for that
commercial company.
If you take $1 trillion out of the economy suddenly, sure, you are
going to have a crisis like this bill anticipates. This bill says, if
there is such a crisis, then a receiver is appointed. Chairman Frank
keeps saying, A receiver is appointed. A receiver is appointed.
That's right. That receiver, after 30 days, is authorized to borrow
90 percent of the fair value of the failing companies.
Chairman Frank, that is $8.5 trillion. That money is not in this
bill. There is not even $10 billion in this bill for this type of
resolution. So you have to go to the banks or you have to go to the
financial companies or you're going to get it after the fact. If
they're failing, how are they going to pay it?
I want to close with a positive. The 320 Members of this House who
took a stand can take a stand in just a few minutes.
Collin Peterson, Chairman Peterson, said that there are no
requirements that end users post margins. We all agree that, if they
had to, it would be $1 trillion out of these companies. $1 trillion,
according to Joe Biden, will produce 700,000 to 1.4 million jobs and
will produce as many as 200,000 jobs a month. So that is the hit to
this economy if this does apply to end users.
So we have a motion to recommit. First, it says there is an exemption
on end users. Now, you have said that there is one, and you have this
letter from Chairman Dodd and Blanche Lincoln saying there is one, so
that's half of it. So you'd vote for that because you're saying it's in
there.
Secondly, there is the Federal audit. We need the taxpayers to
demand--and the voters are demanding--of Mr. Hoyer transparency at the
Fed. They are spending trillions of dollars. They are committing
trillions of dollars. Let's have this audit of the Fed.
Mr. Speaker, the American people are sick and tired of back room
deals and secret manipulations of the economy to benefit political
cronies at the expense of taxpayers.
The voters and taxpayers are demanding transparency and
accountability and they will not be pacified with false promises or
misdirection. Calling a bank tax an ``assessment'' fools no one,
especially the voters.
That's why I will be offering a motion to recommit at the conclusion
of this debate that will replace the weak Federal Reserve Audit in the
conference report with a robust provision patterned after a bill co-
sponsored by 320 members of this House when it was offered by
Congressman Paul.
Taxpayers want to see for themselves what their government is doing
with their money. And that includes specifically the Federal Reserve,
an institution that has unfettered powers and whose errors of judgment
were a contributing cause of the financial crisis.
Monetary policy fueled the credit boom and bust cycle. The Fed needs
to be held accountable for any mistakes it has made in the past and any
it may be making now. Failing to hold the Fed accountable increases the
likelihood of those mistakes being repeated in the future, and exposes
taxpayers to an unacceptable level of risk.
The American people support a full audit of the Federal Reserve
System to achieve the level of transparency needed to protect taxpayer
dollars and ensure accountability.
With each taxpayer dollar it committed during the financial crisis,
the Fed assured the American people they would not take losses.
American taxpayers deserve more than the central bank's assurances;
they deserve proof. A full audit of the Federal Reserve System is the
only way to create the openness that a democratic society like ours
demands.
The second element of the Motion to Recommit attempts to correct one
of the most damaging aspects of this bill and that is saying a lot
because there are a number of seriously misguided provisions in this
legislation.
Several items in the conference report will impact companies' ability
to create jobs.
It has been reported that BP and Enron have tried to manipulate
markets using derivatives but we do not need any new law to regulate
that kind of illegal activity. It is already illegal. We do need
regulators to enforce the rules.
The lack of an end user exemption for commercial companies in the
derivatives title will pull an estimated one trillion dollars of
resources from job creation and investment.
Coincidentally, the combined stimulus packages enacted in the last
two years also amounts to about one trillion dollars. Vice President
Biden told us on June 2nd that the Obama stimulus package alone would
result in the creation of between 700,000 and 1.4 million jobs in the
remainder of 2010. Under the vice president's logic, diverting one
trillion dollars from productive commercial business capital could
presumably destroy up to 1.4 million jobs.
Instead of allocating precious resources to hire more people or
increase wages, commercial companies will have to post capital every
time they enter into a derivatives contract to hedge against legitimate
business risk.
If this legislation--supposedly intended to regulate the financial
services industry--is enacted, capital requirements will force non-
financial companies to abandon legitimate hedging strategies and accept
excessive volatility at a cost that will ultimately be borne by their
customers and employees.
Margin requirements for ``end-users'' are not a new issue for Members
of the House. Chairman Frank tried to insert an amendment in the House
bill last December which would have explicitly allowed regulators to
set margin requirements for end-users. It failed overwhelmingly, by a
vote of 150 to 280.
Withdrawing a trillion dollars from the private sector could well sow
the seeds of the
[[Page H5254]]
next crisis because it could destabilize the financial system, possibly
triggering another vicious cycle of government bailouts to correct the
results of bad government policy.
The House should ensure that the potential economic harm in these
derivative provisions is avoided by approving this Motion to Recommit
and sending this defective legislation back to the conference to be
rewritten.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. FRANK of Massachusetts. I yield myself the balance of my time.
The SPEAKER pro tempore. The gentleman has 7\3/4\ minutes remaining.
Mr. FRANK of Massachusetts. Mr. Speaker, to begin, I want to address
the Members who are concerned that the interchange amendments will
unduly affect smaller financial institutions. The interchange amendment
wasn't part of the bill here. It was put in by a very heavy vote in the
Senate, and the conference process means you compromise.
There is in that amendment, as Senator Durbin put it in, an exemption
for any fee setting by the Federal Reserve for smaller institutions.
They then feared that they would be discriminated against, so we
amended the amendment with the participation of the Senate, obviously.
There are three provisions that protect the smaller institutions,
community banks and credit unions.
There is an antidiscrimination provision that says that merchants and
retailers cannot refuse to accept a debit card. There can be no
discrimination against small banks for their credit cards. The Federal
Reserve, the instructions to the Federal Reserve, include making that
antidiscrimination work, and we can guarantee people we will do it.
So, yes, as the amendment passed the Senate, it said that these
smaller institutions were exempt but that they might have suffered
discrimination. They are protected in this bill. That's why, for
instance, the small banks in Illinois have endorsed this bill.
I also want to talk briefly about what has happened with the TARP. We
had the two last Republican speakers. One hailed the CBO as an
unassailable authority. Then the final speaker said it was hocus-pocus.
It is apparently unassailable hocus-pocus, which I don't want to get
into. It's too late at this time.
This is how the TARP thing works. There are two parts to the TARP.
The bill does say that repayments go to debt relief. There have been
substantial repayments from the banks, and those go to debt relief.
They are unaffected by the amendment. What the amendment says is there
are still tens of billions of dollars of TARP money that could be
committed. The amendment we adopted in conference says no more, that
they cannot do that. That's where the savings comes. So the savings
comes from not allowing additional TARP spending.
You know about the Republicans with regard to cutting off TARP? They
were for it before they were against it. They used to be all for
cutting out the TARP until it came up here. Now, let me say I don't
like that way to do it. I prefer what we had in our provision, which
was to assess the Goldman Sachs, JPMorgan Chase, Mr. Paulson's hedge
fund. That's the way we wanted to do it, but we couldn't get it through
the Republicans in the Senate. So, first, Republicans in the Senate
tell us, Don't do it. Then other Republicans in the Senate say, Why
didn't you do it?
So I'll make Members a pledge right now: The committee I chair will,
I hope, bring out a bill that revives that assessment on the financial
institutions above $50 billion and the hedge funds. So Members who
missed it will get a chance to show us they really care. We will bring
them there, and we will have that come forward.
Now, I do want to talk a little bit about subprime lending and about
the partial history we get.
The fact is that the Republican Party controlled the House and the
Senate from 1995 to 2006. During that period, they showed remarkable
restraint. As eager as they were to restrain subprime lending and as
passionate as they were to reform Fannie Mae and Freddie Mac, they
didn't do it. That's a degree of abstinence unparalleled in political
history. They were in charge.
Whose fault was it? Apparently, it was our fault. It was my fault. As
I said before, people have accused me of being this secret manipulator
of Tom DeLay. Well, if that were the case, you wouldn't have cut taxes
for very rich people. You wouldn't have gone to war in Iraq. As I said,
if he were listening to me, he wouldn't have gotten on the dance show.
So I don't take responsibility for Mr. DeLay. The Republican Party
didn't do it.
Now, the gentleman from California (Mr. Royce) said he tried in 2005.
He had an amendment to the bill of Mr. Oxley. Mr. Oxley, the Republican
chairman of the committee, brought out a bill. Mr. Royce didn't like
it. He brought up his amendments. If no Democrat had voted either in
committee or on the floor of the House on that bill, it would have
looked exactly as it looked. The majority was Republican. So,
apparently, the gentleman from California (Mr. Royce) wasn't able to
persuade even a third of his fellow Republicans to vote with him.
I'm sorry he wasn't able to do better. I'm not an expert in how to
get Republicans to vote with you, so I can't offer him any help. Maybe
he can find somebody who can teach him how to get better votes among
Republicans, but it's not our fault that the Republican Party didn't do
it.
By the way, in 2003, I did say I didn't see a problem with Fannie Mae
and Freddie Mac. Then, in 2004, President Bush said to Fannie Mae and
Freddie Mac, I order you. He had the power and he used it. He used it
to order them to increase their subprime lending purchases. By the way,
he wasn't alone in that. A June 22 article from the Wall Street Journal
quotes a Member of Congress, in 2005, at a hearing, saying, ``With the
advent of subprime lending, countless families have now had their first
opportunity to buy a home or perhaps be given a second chance.'' Fail
once. Get it again.
The American Dream should never be limited to the well-offs or to
those consumers fortunate enough to have access to prime rate loans.
That is from the gentleman from Texas (Mr. Hensarling). So George Bush
wasn't alone in that.
Then 2007 came, and the Democrats took power. We passed a bill, for
the first time in this House, to regulate Fannie Mae and Freddie Mac.
Secretary Paulson liked the bill. He said it didn't go as far as he
would have liked, but it was a good bill. In 2008, it finally passed,
and Fannie Mae and Freddie Mac were put in a conservatorship. They were
the first major institutions to be reformed.
By the way, in 2007, in this House, we also passed a bill to control
subprime lending. Now, the gentleman from Alabama had been the chairman
of the subcommittee with jurisdiction over subprime lending during some
of those Republican years, and he never produced a bill. He said it was
our fault. He wrote us a letter--myself, Mr. Watt of North Carolina,
and Mr. Miller of North Carolina--and we didn't tell him we'd vote for
it.
You know, I wish I could have it back. I wish I knew I was secretly
in charge of the Republican agenda. I wish I knew they wouldn't do
anything unless I said they could and that they would do something if I
said they should, but no one told me. Where were they when I needed
them to be more powerful? He didn't bring it forward. It wasn't my
fault. The Republicans never checked with me as to what they were
supposed to do.
In 2007, we did pass such a bill to restrict subprime lending, and
The Wall Street Journal attacked us. It said it was a ``Sarbanes-
Oxley'' for housing. Sarbanes-Oxley is about as nasty as you can get in
The Wall Street Journal, and here is what they said about subprime
lending in 2007.
{time} 1815
So maybe that is why George Bush expanded subprime lending.
The Wall Street Journal said in 2007, complaining about our bill,
``But for all the demonizing, about 80 percent of even subprime loans
are being repaid on time and another 10 percent are only 30 days
behind. Most of these new homeowners are low-income families, often
minorities, who would otherwise not have qualified for a mortgage. In
the name of consumer protection, Mr. Frank's legislation will ensure
that far fewer of these loans are issued in the future.''
Yeah. Unfortunately, a couple of years too late, because we couldn't
get that through. But the Wall Street
[[Page H5255]]
Journal was right, we would limit them, but wrong, along with the
gentleman from Texas (Mr. Hensarling) about the subprime loans. And I
also wanted to do affordable rental housing, which that administration
opposed.
This bill has the biggest package of increased consumer protections
in the history of America. And it doesn't ban products or ration
products. It says there is going to have to be fair dealing. This bill
says that there is a fiduciary responsibility on people selling
products to individual investors for the first time. It gives the SEC
the power to do it, and they are going to do it. This bill reforms the
system, and I hope it is enacted.
This conference report would not have been possible without the hard
work of staff on both sides of the Capitol. I thank them for their
efforts and submit the following list:
Wall Street Reform--Staff
House Financial Services Committee
Jeanne Roslanowick
Michael Beresik
David Smith
Adrianne Threatt
Andrew Miller
Daniel Meade
Katheryn Rosen
Kate Marks
Kellie Larkin
Tom Glassic
Rick Maurano
Tom Duncan
Gail Laster
Scott Olson
Lawranne Stewart
Jeff Riley
Steve Hall
Erika Jeffers
Bill Zavarello
Steve Adamske
Elizabeth Esfahani
Daniel McGlinchey
Dennis Shaul
Jim Segal
Brendan Woodbury
Patty Lord
Lois Richerson
Jean Carroll
Kirk Schwarzbach
Marcos Manosalvas
Marcus Goodman
Garett Rose
Todd Harper
Kathleen Mellody
Jason Pitcock
Charla Ouertatani
Amanda Fischer
Keo Chea
Sanders Adu
Hilary West
Flavio Cumpiano
Karl Haddeland
Glen Sears
Stephane LeBouder
Office of Rep. Carolyn Maloney
Kristin Richardson
Office of Rep. Gregory Meeks
Milan Dalal
Office of Rep. Mary Jo Kilroy
Noah Cuttler
Office of Rep. Gary Peters
Jonathan Smith
House Agriculture Committee
Clark Ogilvie
House Budget Committee
Greg Waring
House Energy and Commerce Committee
Phil Barnett
Michelle Ash
Anna Laitin
House Judiciary Committee
George Slover
House Oversight and Government Reform Committee
Mark Stephenson
Adam Miles
House Legislative Counsel
Jim Wert
Marshall Barksdale
Brady Young
Jim Grossman
Senate Banking Committee
Ed Silverman
Amy Friend
Jonathan Miller
Dean Shahinian
Julie Chon
Charles Yi
Marc Jarsulic
Lynsey Graham Rea
Catherine Galicia
Matthew Green
Deborah Katz
Mark Jickling
Donna Nordenberg
Levon Bagramian
Brian Filipowich
Drew Colbert
Misha Mintz-Roth
Lisa Frumin
William Fields
Beth Cooper
Colin McGinnis
Neal Orringer
Kirstin Brost
Peter Bondi
Sean Oblack
Steve Gerenscer
Dawn Ratliff
Erika Lee
Joslyn Hemler
Caroline Cook
Robert Courtney
Abigail Dosoretz
Senate Agriculture Committee
Robert Holifield
Brian Baenig
Julie Anna Potts
Pat McCarty
George Wilder
Matt Dunn
Elizabeth Ritter
Stephanie Mercier
Anna Taylor
Cory Claussen
Senate Legislative Counsel
Rob Grant
Alison Wright
Kim Albrecht-Taylor
Colin Campbell
Laura McNulty Ayoud
Congressional Research Service
Baird Webel
Mr. LEVIN. Mr. Speaker, I rise in strong support of H.R. 4173, the
Wall Street Reform and Consumer Protection Act.
Almost two years ago, this House was faced with painful dilemma: risk
the collapse of our financial system and a second Great Depression, or
take action to stabilize financial markets. The comprehensive financial
regulatory reform before us will help to ensure that we are never again
forced to choose between bailing out banks and saving our economy.
In the run up to the financial crisis, rampant speculation, and in
some cases fraud, in the residential housing and mortgage markets
combined with an explosion of complexity in our financial markets to
create a bubble that when it burst, rippled through our entire economy.
The financial crisis that began in 2008 was the worst since the Great
Depression and was enabled and made worse by a lax regulatory
environment that for many years failed to properly supervise financial
markets and control the risks Wall Street was creating.
Under the bill before us, for the first time, there will be a federal
regulatory body with the responsibility to identify and address
systemic risks to our economy. Transparency will be brought to
derivatives markets so that these complex financial instruments cannot
transmit shockwaves through our financial system. Consumers will be
able to get the clear, accurate information they need to shop for
credit cards, mortgages and other financial products, rather than being
sold products that are too good to be true by unregulated lenders who
know they are unaffordable.
Mr. Speaker, the Wall Street Reform and Consumer Protection Act will
restore responsibility, accountability and transparency to our
financial markets. I urge all of my colleagues to stand with the
working Americans who have been the victims of the financial crisis
rather than defend a discredit ideology that says government is always
wrong and markets are always right. We have seen in the last two years
that markets can get out of control, and we need appropriate structures
in place to ensure that our financial markets work for all Americans.
Mr. BACHUS. Mr. Speaker, I want to add these comments regarding
Section 913 of the Report calling for a review by the Securities and
Exchange Commission, SEC, of the current regulation of investment
advisers and broker-dealers.
The Conference Report on H.R. 4173 directs the SEC to conduct a study
to evaluate the effectiveness of current standards--both at the state
and federal levels--with respect to investment advisers and broker-
dealers when providing personalized investment advice and
recommendations about securities to retail customers.
Before the SEC proceeds with any new rules and regulations in this
area, it is critically important that the unique roles of different
financial professionals, their distinct relationships with their
customers, and the nature of the services and disclosures they provide
be fully examined and well understood. These definitive factors should
provide information to guide the SEC in determining if any new rules
and regulations are needed and defining the details of any such
measures that might be proposed.
The conferees included the requirement for a comprehensive study for
these purposes, and I anticipate that the SEC will follow the intent of
Congress with a thorough and objective analysis in this regard.
Mr. DAVIS of Illinois. Mr. Speaker, we are gathered today with the
opportunity to implement Wall Street reform, and help make our
financial markets safer for everyday American citizens, investors, and
small businesses. At the center of our efforts today is the concept of
power, and what it means to those who have it, and those who don't.
Baltasar Gracian, a renowned Spanish Jesuit writer, once said that
``The sole advantage of power is that you can do more good.''
I think many people would agree with me that the corporations and
executives on Wall Street have considerable power. The question
remains, however, whether they are using that
[[Page H5256]]
power to do good things. People will point out, and I agree, that they
are making many people very wealthy, but at what cost? For too long
corporate interests have been allowed to dominate decision making in
America's financial capital, and many times, this has meant unfair and
predatory practices. As lawmakers, we should set out to make our
financial markets a more evenhanded place for our citizens, and the
consumers that put their trust and money on the line.
One of the key things that H.R. 4173 will do is to create a Consumer
Financial Protection Bureau, tasked with the responsibility of making
sure consumer lending practices are fair. Also, under the Volcker rule,
large financial institutions would no longer be allowed to engage in
risky trading using federal dollars, supported by taxpayers. Throughout
the many various initiatives and stipulations in the bill, one theme is
clear: protecting American citizens, and maintaining a fair market that
allows both informed consumers and powerful financial markets to thrive
in tandem.
H.R. 4173 does not set out to take power away from those on Wall
Street, but to make sure they use their many strengths and abilities
for the benefit of the average American investor and small business
owner. I rise in support of H.R. 4173, the Restoring American Financial
Stability Act of 2010, knowing that the benefits and wealth for the few
should not come at the cost of the many.
Mr. PETERSON. Mr. Speaker, I rise today to discuss some of the
jurisdictional issues that arise out of Title VII of H.R. 4173. The
bill brings a new regulatory regime to swaps as it will be defined
under the Commodity Exchange Act, CEA. Title VII of H.R. 4173 extends
the Commodity Futures Trading Commission's, CFTC's, exclusive
jurisdiction under the CEA to also include swaps, except as otherwise
provided elsewhere in Title VII. Also included in Title VII are two
savings clauses for the Securities and Exchange Commission, SEC, and
one for the Federal Energy Regulatory Commission, FERC.
Title VII allocates authority over swaps and security-based swaps as
follows. First, the CFTC has exclusive jurisdiction over swaps,
including swaps on broad-based security indexes. Within the swap
definition is a category of swaps called security-based swap
agreements. For this specific category of swaps, the CFTC will continue
to exercise its full jurisdictional authority, while the SEC may
exercise certain specific authorities over these products, as outlined
in Title VII. Title VII also clarifies that the SEC has jurisdiction
over security-based swaps, which are swaps on narrow-based security
indexes and single securities, and that the two agencies share
authority over mixed swaps.
Nothing in the SEC savings clauses, or any other provision of Title
VII, alters the existing jurisdictional divide between the CFTC and SEC
established by the Johnson-Shad Accord which, among other things,
provides the CFTC exclusive jurisdiction over futures (and options on
futures) on broad-based security indexes. Nor do these savings clauses,
or any other provision of Title VII, divest or limit the authority that
the CFTC shares with the SEC over security futures products as
authorized by the Commodity Futures Modernization Act of 2000.
This bill also clarifies the authorities of the CFTC and FERC over
financial instruments--both swaps and futures--traded pursuant to FERC
or state approved tariffs or rate schedules.
Section 722 preserves FERC's existing authorities over financial
instruments traded pursuant to a FERC or state approved tariff or rate
schedule, which under current law does not extend to CFTC-regulated
exchanges and clearinghouses, because these are within CFTC's exclusive
jurisdiction. The CFTC's authorities over futures and swaps traded
pursuant to FERC or state approved tariffs or rate schedules are also
fully preserved. The bill further specifies that, outside of regional
transmission organizations/independent system operators (RTOs/ISOs)
markets, the CFTC shall continue to have exclusive jurisdiction over
financial instruments traded on CFTC-regulated exchanges, such as NYMEX
or ICE, traded through swap execution facilities, or cleared on CFTC-
regulated clearinghouses.
To avoid the potential for overlapping or duplicative FERC and CFTC
authority, the bill provides the CFTC with the authority to exempt
financial instruments traded within an RTO/ISO from CFTC regulation if
the CFTC determines the exemption would be consistent with the public
interest and the purposes of the Commodity Exchange Act.
Section 722 also preserves FERC's anti-manipulation authority as it
currently exists under the Federal Power Act and the Natural Gas Act
prior to enactment of this legislation.
Mr. SKELTON. Mr. Speaker, thriving capital markets depend upon
innovation to grow the economy and to generate jobs. Yet, market
innovation must be conducted responsibly and must be carefully
monitored by public regulators to ensure Wall Street's complex
financial transactions do not put at risk the savings of average
American families or the national economy as a whole. The famous quote
by U.S. Supreme Court Justice Louis Brandeis indicating that ``sunlight
is the best disinfectant'' certainly applies to Wall Street.
In recent years, market innovation ran afoul of public regulators as
financial giants gambled with the savings of working families and
placed irresponsible bets that put in jeopardy America's financial well
being. Titans of the financial industry acted not to promote the
general welfare of the United States, as is outlined in the preamble to
our Constitution, but against the well-being of the American public.
And, as all of us know, broken regulations, greed, and incessant risk
taking on Wall Street cost each one of us--the American taxpayers--who
helped to save our economy from ruin in the fall of 2008.
From the beginning of this crisis, I have felt strongly that Congress
ought to consider authorizing tough new regulations on Wall Street to
help shine a brighter light on extremely complex financial
transactions.
In my view, writing into law mechanisms that prevent financial
institutions from getting ``too big to fail;'' that reform the Federal
Reserve; that better regulate hedge funds, securities, derivatives and
credit rating agencies; and that give shareholders a greater say in the
compensation of financial company executives makes good sense and, if
done properly, would help to ensure American taxpayers are never again
put on the hook for Wall Street's misbehavior while creating an
environment for responsible market innovation.
But, as important as new regulations are for our country, Congress
must be careful in authorizing them. We must direct regulations at Wall
Street and other bad actors while not wrapping America's home town
financial institutions into costly and complex sets of new rules, such
as those associated with the new Consumer Financial Protection Bureau.
Community banks and credit unions are the heart of small towns across
this country. For years, they have been conservative with their money
and played by the rules. They ought not be forced to pay the price for
Wall Street's transgressions.
The Dodd-Frank Wall Street Reform and Consumer Protection Act is
well-intentioned, and I support much of the legislation. But the
measure falls short in my goal to target Wall Street without disrupting
Main Street banks and credit unions and their customers.
Home town financial institutions help to generate jobs and economic
development in rural America by lending to families, small businesses,
and farmers. They will be key to our nation's economic recovery and
should be guaranteed more, not less, economic certainty by Congress.
The uncertainty associated with the Dodd-Frank bill is why it is
opposed by Missouri's small town banks and credit unions and by many in
our nation's business community.
Creating more economic certainty for Missouri's business community
and improving rural economic development have been priorities for me
during the 111th Congress. It is why I have sought to cut small
business taxes and to cut red tape associated with government backed
small business loans, opposed a massive health insurance overhaul bill,
urged bank regulators to consider easing restrictive capital
requirements on small banks that want to issue loans, and supported a
$30 billion small business lending fund program to allow community
banks to lend money to healthy small businesses that want to expand and
hire workers.
Wall Street reform is badly needed and the Dodd-Frank bill is a step
in the right direction. However, I cannot lend my support to a bill
that places costly new regulations on Missouri's home town banks and
credit unions at a time when the government ought to be encouraging
them to lend money to create jobs in the private sector.
I urge the conference committee to return to work on the Dodd-Frank
bill so it can fine tune the bill's new regulatory authority in a way
that cracks down on Wall Street financial firms and irresponsible
mortgage lenders without unduly targeting America's community banks.
This action would be in the best interest of financial system reform
and of the overall economic well being of small town America.
Ms. CORRINE BROWN of Florida. Mr. Speaker, I rise today to speak
about H.R. 4173, the Wall Street Reform and Consumer Protection Act.
Credit unions have been good stewards of our money. I say our money,
because while they have not been eligible for any of the TARP funds,
they have not been involved in the subprime loan situation many have
blamed as causing this economic crisis. When the stimulus went into
effect, Credit Unions were the only ones trying to lend money.
I have been hearing a lot from the credit unions and community banks
in my district regarding the debit interchange provision. I am very
concerned that the interchange provision
[[Page H5257]]
may have the unintended consequence of adversely affecting these small
financial institutions. I know they are intended to be carved-out of
this provision and I hope that my colleagues will join me in
encouraging the Federal Reserve and the card payment networks to make
sure that the carve-out envisioned under this provision is meaningful
and effective.
I was pleased to read the statement from Chairman Frank restating his
views of the interchange amendment included in the conference report. I
urge him to work with the Credit Union National Association as it works
with the Fed to ensure that credit unions with under $10 billion in
assets were held exempt from the Fed interchange changes. Chairman
Frank's statement gives the Fed strong guidance to follow when this
bill becomes law.
In conclusion, the Interchange language exempts all community banks
and credit unions with under $10 billion in assets. To achieve this,
we: included language that explicitly prohibits intra-brand
discrimination. Thus, if a merchant takes a Visa debit card, it must
take all Visa debit cards. Also exempted credit cards. As Chairman
Frank has noted, ``for good measure . . . merchants and retailers
cannot discriminate against small banks for the credit cards they
issue.'' Furthermore, when the Federal Reserve issues rules regulating
interchange fees, it is directed, in Chairman Frank's words, ``to
ensure that community banks and credit unions remain exempt from the
requirements and are able to continue to issue their debit cards
without any market penalty.''
This exempts all but three credit unions nationwide.
Beyond this, here are additional measures in the Interchange
amendment that more broadly benefit working families: fixed states'
concerns by removing government-administered pay programs from
interchange fee regulation. Fixed concerns of pre-paid folks who offer
services to the under-banked by removing them from interchange fee
regulation. With respect to this, we also added pro-consumer language
that Sander Levin has in a bill to prohibit overdraft fees and fees on
the first monthly ATM withdrawal using one of these cards. Ensured that
USDA's SNAP, food stamp, program is not affected.
I look forward to passage of this bill and the fair treatment of
Credit Unions by the Federal Reserve.
Mr. HASTINGS of Florida. Mr. Speaker, I want to commend Chairman
Frank on an extraordinary effort and for his dedicated leadership in
bringing this bill to the floor. I look forward to supporting this
legislation.
Before that however, I would like to clarify a few points as they
pertain to the intent of this bill.
It is my understanding that certain provisions which are intended to
improve access to mainstream financial institutions are not intended to
further limit access to credit and other financial services to the very
consumers who are already underserved by traditional banking
institutions.
As the Chairman knows, each year, over 20 million working American
families with depository account relationships at federally insured
financial institutions actively choose alternative sources and lenders
to meet their emergency and short-term credit needs.
These alternative sources and lenders often offer more convenient and
less expensive products and services than the banks or credit unions
where these consumers have relationships.
Further, as the demand for short-term, small dollar loans continues
to increase as a result of the current economic environment, non-
traditional lenders have filled the void left by mainstream financial
institutions in many of our nation's underbanked communities.
I agree with the Chairman that lenders should meet this demand
responsibly with clear, well-disclosed product terms and conditions
that do not encourage consumer dependence and indebtedness.
I would also stress that regulation of this sector of the market
should ensure strong consumer protections while encouraging a broad
range of product offerings without discrimination as to the type of
lender.
Therefore, regulation of short-term credit products and of the
lenders who offer them, whether they be traditional financial
institutions or non-traditional lenders, should not be used to single
out an entire sector.
Rather, it should be well-balanced and carried out in a manner that
encourages consumer choice, market competition, and strong protections.
It is my sincere hope that this legislation is designed to carefully
and fairly police the financial services industry, treating similar
products in the short-term credit market equally while encouraging
lending practices that are fair to consumers. Is this the intent of the
legislation?
I thank the Chairman, commend his continued efforts to pass
meaningful financial regulatory reform this Congress, and thank him for
his previous efforts to ensure we responsibly address the role of non-
traditional financial institutions. I look forward to continuing our
work together in this matter and as we further our efforts to put our
nation back on solid financial footing.
Mr. BLUMENAUER. Mr. Speaker, I rise today to support the Conference
Report on H.R. 4173--the Dodd-Frank Act of 2010. This legislation will
strengthen our financial system by providing new rules that bar big
banks and Wall Street investment houses from the risky practices that
badly damaged our economy. The legislation also enacts new consumer
protections to block predatory lending practices and financial
gimmickry.
It was famously remarked by Professor Elizabeth Warren that it is
``impossible to buy a toaster that has a one-in-five chance of bursting
into flames and burning down your house. But it is possible to
refinance an existing home with a mortgage that has the same one-in-
five chance of putting the family out on the street.'' With passage of
this bill, Congress has ensured stronger protections for families and
small businesses by ensuring that bank loans, mortgages, and credit
cards are fair, affordable, understandable, and transparent. The bill
has been called the ``strongest set of Wall Street reforms in three
generations'' by Professor Warren. I am proud of my work with Professor
Warren and I commend her efforts in strengthening this bill.
The financial crisis cost us 8 million jobs and $17 trillion in
retirement savings. It was the worst financial crisis since the Great
Depression. The financial crisis limited investment, cost jobs, put
families on the street, and has ushered in a sense of financial anxiety
that limits American imagination and opportunity.
The Dodd-Frank Act establishes a strong set of consumer protections,
including a Consumer Financial Protection Bureau that will be led by an
independent director appointed by the President and confirmed by the
Senate, with a dedicated budget in the Federal Reserve. The Bureau will
write rules for consumer protections governing all financial
institutions--banks and non-banks--offering consumer financial services
or products and oversee the enforcement of federal laws intended to
ensure the fair, equitable and nondiscriminatory access to credit for
individuals and communities. The bureau will roll together
responsibilities that are now spread across seven different government
entities, providing consumers with a single, accountable, and powerful
advocate.
The legislation also establishes strong mortgage protections. The
bill requires that lenders ensure that their borrowers can repay their
loans by establishing a simple federal standard for all home loans.
Lenders also are required to make greater disclosures to consumers
about their loans and will be prohibited from unfair lending practices,
such as steering consumers to higher cost loans. Lenders and mortgage
brokers who fail to comply with new standards can be held accountable
by consumers for as much as three-years of interest payments, any
damages, and any attorney's fees.
The Dodd-Frank Act also disciplines Wall Street. It imposes tough new
rules on banks to prevent the risky financial practices that led to the
financial meltdown. Taxpayers will no longer pay the price for Wall
Street's irresponsibility. The bill creates a process to shut down
large failing firms whose collapse would put the entire economy at
risk. After exhausting all of the company's assets, additional costs
would be covered by a ``dissolution fund,'' to which all large
financial firms would contribute.
The dissolution of a failing firm will be paid for first by
shareholders and creditors, followed by the sale of any remaining
assets of the failed company. Any shortfall that results is paid for by
the financial industry. The bill requires big banks and other financial
institutions, those with $50 billion in assets, to foot the bill for
the failure of any large, interconnected financial institution posing a
risk to the entire financial system, as AIG did in the run-up to the
2008 financial crisis. Financial institutions will pay assessments
based on a company's potential risk to the whole financial system if
they were to fail. Before regulators can dissolve a failing company, a
repayment plan to charge Wall Street firms and big banks must be in
place to recoup any cost associated with the shutdown.
It has been remarked that the markets will discipline themselves,
that all that stands between poverty and wealth is some mythical
regulatory barrier. But that is not what we found in the financial
world and not what recent history illustrated. Instead, the market
allowed participants to take wild reckless risks. This legislation
reins in these irresponsible risks that cost us millions of jobs,
millions of hours of economic productivity, millions of homes that have
been foreclosed, and trillions in American savings. I look forward to
passing this important legislation.
Mr. STARK. Madam Speaker, I rise today in support of the Wall Street
Reform and Consumer Protection Act. This bill will protect consumers
from ever again being forced to bail
[[Page H5258]]
out private financial institutions and brings overdue oversight to our
financial markets.
We learned the hard way that when private financial institutions grow
too large, their failure will put our entire financial system and
economy in peril. Mammoth companies like AIG, Citigroup, and Bank of
America took excessive risks and invested in risky financial products.
When the economy turned, it was taxpayers that bailed them out.
This bill imposes new requirements to discourage companies from
becoming too large and unstable. Financial institutions will be
prohibited from taking on excessive debt. The new Volcker Rule will
limit the amount of money a bank can invest in hedge funds and
otherwise use to gamble for its own benefit. Risky derivatives
contracts owned by the banks will be subject to regulatory oversight
and approval by government agencies. The bill also arms regulators to
dismantle failing financial companies at the expense of the financial
industry, not taxpayers.
This bill does more than just rein in the financial institutions, it
will also protect families. I strongly support the provision that will
create a new Bureau of Consumer Financial Protection. This independent
bureau within the Federal Reserve will be on the front lines protecting
taxpayers from predatory lenders and other unfair practices by mortgage
brokers, banks, student lenders, and credit card companies.
The bill goes a long way to prevent another foreclosure crisis by
reforming the mortgage industry. The bill prohibits pre-payment
penalties that trap borrowers into unaffordable loans. It outlaws
financial incentives that encourage lenders to steer borrowers into
complicated high-interest loans. There will be penalties for lenders
and mortgage brokers who do not comply with these new standards. If a
bad credit score negatively impacts someone in a hiring decision or a
financial transaction, the consumer will have free access to their
score.
This bill could be better. Breaking up the big banks would be the
most effective tool to bring reform to Wall Street. This financial
reform bill will usher in a new era for both financial institutions and
consumers. Banks will have to learn to operate under increased scrutiny
and face immediate consequences when they don't play by the rules. I
support the Wall Street Reform and Consumer Protection Act and urge my
colleagues to do the same.
Mr. LANGEVIN. Mr. Speaker, I rise in strong support of the conference
report to H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer
Protection Act, which closes frequently exploited loopholes in our
regulation system, puts an end to rewarding reckless investments, and
demands responsibility and accountability from Wall Street to prevent
another economic collapse.
Over the past few years, the irresponsible actions of financial
institutions and corporations have provided countless illustrations of
the need to fix our broken system. As a result of the financial crisis,
our country shed eight million jobs and Americans lost $17 trillion in
retirement savings and net worth. My home state of Rhode Island was on
the front lines of abusive and predatory lending practices, which led
to one of the country's highest foreclosure rates, and has endured
devastating job loss, now suffering the fourth highest unemployment
rate in the nation at 12.3 percent.
Like my constituents, I have been angered by the greed exhibited by
Wall Street and other companies that took advantage of their investors,
preyed on our citizens, and rewarded executives with outrageous pay
packages. With this bill, consumer protection will come first, and
irresponsible companies will be held accountable for their actions.
H.R. 4173 establishes the Consumer Financial Protection Agency, which
will protect families and small businesses by ensuring that bank loans,
mortgages, credit cards and other financial products are fair,
affordable and transparent. These new protections are targeted and
fair: Merchants will be excluded from the oversight of the CFPA, and
small banks and credit unions will not be subject to undue regulatory
burdens. There will also be coordination with other regulators when
examining banks to prevent undue regulatory burden.
This measure also establishes an orderly process for dismantling
large, failing financial institutions like AIG or Lehman Brothers,
which will protect taxpayers and prevent ripple effects throughout the
rest of the financial system. This bill also discourages financial
institutions from taking too many risks by imposing tough new capital
and leverage requirements. Most importantly, there will be no more
taxpayer bailouts for ``too big to fail'' institutions. This
legislation will also effectively end new lending under the Troubled
Asset Relief Program.
Additionally, H.R. 4173 responds to the failure to detect frauds like
the Madoff scheme by ordering a study of the entire securities
industry. This measure will also increase investor protections by
strengthening the Securities and Exchange Commission and boosting its
funding level. For the first time ever, the over-the-counter
derivatives marketplace will be regulated and hedge funds will have to
register with the SEC. And the bill takes steps to reduce market
reliance on the credit rating agencies and impose a liability standard
on the agencies. This legislation will help create an environment in
which financial institutions take care of--and are held accountable
to--their shareholders and customers.
I would like to thank the committees for their work on this bill, and
especially want to thank Chairman Frank for his leadership on this
strong reform measure. This legislation represents a tremendous
accomplishment for this Congress and this country. It is an urgently
needed response to a crisis that should never have been allowed to
happen, and its protections and reforms will benefit Americans for
generations to come. I encourage all my colleagues to vote for this
bill.
Mr. BOEHNER. Mr. Speaker, the legislation before us fails the
American people.
Americans have suffered through a financial meltdown. A serious
financial meltdown that destroyed millions of jobs and wiped out the
savings of millions of American families. A devastating meltdown that
slowed our economy, and raised new doubts about whether it's even
possible any longer to pursue the American Dream.
The legislation before us will do nothing to prevent it from
happening to the American people again.
The fact of the matter is, the financial meltdown was triggered by
government mortgage companies, giving too many high-risk loans to
people who couldn't afford them. And it was the policies of the
leadership of this Congress that allowed it to happen.
This legislation will do nothing--nothing--to fix those mistakes.
The bill is more than 2,000 pages long.
That in and of itself is an outrage. Haven't we learned our lesson
yet? Any bill produced by this Congress that is 2,000 pages long can't
possibly be good for jobs, or freedom, or our economy.
In those 2,000 pages, there is not a single reform made to Fannie Mae
or Freddie Mac, the government mortgage companies at the heart of the
meltdown.
Mr. Speaker, this is not reform. It's more of the same.
This is not change. It's the status quo.
It's a sham.
Things could have been different. We could be here today passing a
bipartisan bill to reform government-sponsored enterprises like Fannie
Mae and Freddie Mae. Republicans, led by Spencer Bachus, offered such a
proposal.
Instead of reforming Fannie and Freddie, we're doing this 2,000 page
monstrosity that will destroy jobs.
Mr. Speaker, what are we thinking? What are we doing?
Today the president of the United States was in Wisconsin. He gave
remarks there chastising Republicans for our objections to this bill.
He suggested those who oppose the legislation before us are ``out of
touch.''
The American people are tired of the rhetoric. They want solutions.
What's ``out of touch'' are politicians who care more about elections
and campaign ads than they do about solutions.
What's ``out of touch'' are politicians who pass 2,000 page bills
that will destroy jobs, at a time when 1 in every 10 Americans from our
workforce is out of work.
What's ``out of touch'' are politicians who believe it's OK to force
responsible Americans to use their tax dollars to subsidize
irresponsible behavior.
Under this bill, Americans will have no choice but to keep on
subsidizing the irresponsible behavior that got America into this mess.
There is no reform to Fannie Mae and Freddie Mac. There's just 2,000
new pages of bigger government, private sector mandates, and unintended
consequences.
The American people are sick and tired of it.
Mr. Speaker, when are we going to stop forcing responsible American
citizens to subsidize irresponsible behavior?
When are we going to stop passing massive bills that destroy jobs?
When are we going to start working on real solutions to the
challenges facing this country?
Apparently, not today.
I urge my colleagues--vote ``no'' on this job-killing bill, and let's
get to work on a real reform bill that will fix the problems that led
to the financial meltdown.
Mr. FATTAH. Mr. Speaker, I rise in strong support of the Conference
Report to Accompany H.R. 4173, the Wall Street Reform and Consumer
Protection Act of 2010. Rectifying the worst economic crisis to impact
the financial markets since the Great Depression, the Wall Reform and
Consumer Protection Act of 2010 outlaws many of the egregious industry
practices that marked the subprime lending boom, ensuring mortgage
lenders make loans that benefit the consumer rather than incentivizing
self-dealing profit maximization.
[[Page H5259]]
In supporting this legislation, Congress corrects the failures of the
financial sector, preventing the calamity that transpired after the
collapse of the financial markets from reoccurring in the future.
One of the critical components of this legislation is the adoption of
a provision that will end the practice of acting on behalf of financial
institutions due to the determination that they are ``too big to
fail.'' Taxpayers will no longer be asked to subsidize failing
institutions due to their potential negative impact on the economy. The
bill creates a new structure in which the orderly dissolution of failed
financial firms can occur without fear of financial panic. The bill
also imposes tough new capital and leverage requirements that create a
disincentive for financial institutions to get too large without
adequate structural support to ensure the financial soundness of the
institution. Furthermore, the bill establishes rigorous standards for
financial institutions in order to better protect the economy and
American consumers, as well as investors and businesses.
Another important component of this legislation is the creation of a
new independent watchdog within the Federal Reserve that provides
consumers with clear and accurate information needed to shop for
mortgages, credit cards, and other financial products. The new
regulatory structure protects consumers from hidden fees, abusive
terms, and deceptive practices that were unfairly used against
consumers with disturbing frequency. Furthermore, loopholes that allow
financial institutions to engage in risky and abusive practices,
including the unregulated exchange of over-the-counter derivatives,
asset-backed securities, and hedge funds are eliminated.
Most importantly, the Wall Street Reform and Consumer Protection Act
includes the Emergency Homeowners' Relief Fund, which will provide
desperately needed assistance to millions of homeowners who now find
they are unable to meet their financial obligations due to the severe
recession caused by the unbridled greed and recklessness of the
financial services industry. The foreclosure rate in the United States
has been rising rapidly since the middle of 2006. Losing a home to
foreclosure can hurt homeowners in many ways. For example,
homeowners who have been through a foreclosure may have difficulty
finding a new place to live or obtaining a loan in the future.
Furthermore, concentrated foreclosures can drag down nearby home
prices, and large numbers of abandoned properties can negatively affect
communities. Finally, the increase in foreclosures may destabilize the
housing market, which could in turn negatively impact the economy as a
whole.
Although the economic recovery from the worst financial recession
since the Great Depression is progressing steadily under the leadership
of the Obama Administration and Democratic Leadership in Congress, the
tragic rise of unemployed homeowners threaten a sustained recovery.
Unemployment is now the leading cause for delinquency for families
facing foreclosure. A recent study by NeighborWorks that examined the
reasons why people are falling behind on their mortgages found that 58
percent of delinquent homeowners were behind due to job loss. The
impact of foreclosures is particularly acute in minority communities
due to the disproportionately high rates of joblessness.
Repossessions from housing foreclosures rose to a record high of
92,432 in April 2010, which is up 45 percent from the previous year.
Continual rates of high unemployment places additional pressures on a
financial system already overburdened with requests to modify loans by
mortgage servicers, with many of those requests being unfulfilled.
Under the guidance of the Department of Treasury, the Obama
Administration created the Home Affordable Modification Program (HAMP)
as a part of the Making Home Affordable program to provide desperate
relief to unemployed and underemployed homeowners.
HAMP encourages servicers to provide mortgage modifications for
troubled borrowers in order to reduce the borrowers' monthly mortgage
payments to no more than 31 percent of their monthly income. In order
to qualify, a borrower must have a mortgage on a single-family
residence that was originated on or before January 1, 2009, must live
in the home as his or her primary residence, and must have an unpaid
principal balance on the mortgage that is no greater than the Fannie
Mae/Freddie Mac conforming loan limit in high-cost areas ($729,750 for
a one-unit property). Furthermore, borrowers must currently be paying
more than 31 percent of their income toward mortgage payments, and must
be experiencing a financial hardship that makes it difficult to remain
current on the mortgage. Borrowers need not already be delinquent on
their mortgage in order to qualify.
Though the Obama Administration's efforts are commendable, the
unprecedented scale of the problems facing homeowners demands that more
needs to be done to prevent homeowners from losing their homes. In
Pennsylvania, a major state initiative to combat family-devastating
foreclosures has been operating with success for more than a quarter-
century, enacted in the wake of the severe recession of 1983. The
Homeowners Emergency Mortgage Assistance Program (HEMAP) has provided
loans to over 43,000 homeowners since 1984 at a cost to the Keystone
State of $236 million. Assisted homeowners have repaid $246 million to
date which works out to a $10 million profit for the state after 25
years of helping families keep their homes.
The Pennsylvania model will work nationally. It is with great
gratitude that Chairman Frank and Chairman Dodd included my proposed
mortgage relief provisions in the conference report that is being
considered before the House today. Modeled after the bill I introduced
in the House, the Emergency Homeowners' Relief Fund that is contained
in the House-Senate conference bill establishes an emergency mortgage
assistance program for qualifying homeowners who are temporarily unable
to meet their obligations due to financial hardship beyond their
control.
Under this program, homeowners would have the opportunity to regain
financial stability without the immediate pressure of foreclosure.
Specifically, a homeowner who indicated that he or she was unemployed
would provide verification of unemployment compensation to the servicer
and automatically be approved for a loan that would pay any mortgage
above 31 percent of their income (the target amount in Making Home
Affordable modifications). The Treasury would make payments for the
homeowner on the homeowner's behalf until the borrower is able to
resume payments to the lender. The Emergency Homeowners' Relief Fund
would cut through the disorder of the loan modification program and
slow the numbers of foreclosed properties on the market.
Mr. Speaker, I wish to thank my colleagues on the House Financial
Services Committee, Chairman Barney Frank, Congresswoman Maxine Waters
and Congressman Paul Kanjorski. I also wish to thank my colleagues in
the Senate, Banking, Housing and Urban Affairs Committee Chairman Chris
Dodd, and Senator Bob Casey for their strong support of the mortgage
foreclosure relief provisions contained in this bill. I also wish to
thank the House Financial Services Committee staffers for their hard
work in preparing this conference report, including Housing Policy
Director Scott Olson and Deputy Chief Counsel Gail Laster. In addition,
I would like to thank my Legislative Director, Nuku Ofori, for all of
his efforts in getting this critical mortgage relief provisions
included in the Wall Street Reform bill.
Ms. ROS-LEHTINEN. Mr. Speaker, It is a great tragedy that the final
version of the financial services bill which was approved by a House-
Senate conference, contained little or no help for the hundreds of
victims of Ponzi schemes, many of whom reside in my Congressional
district.
This bill fell far short of doing everything or even anything, to
assure the average American investor in the stock market that we want
to protect their interests.
I proposed to the conferees certain amendments to the Securities
Investor Protection Act (SIPA) in order to protect victims of Ponzi
schemes. Unfortunately, these reforms which were designed after
extensive discussions with many of the victims, were totally ignored.
My amendments included an ``anti-clawback'' provision, designed to
end the terror of thousands of Ponzi victims, who face years of
prolonged litigation against the government, unless these proposals are
enacted.
Under no circumstances, except complicity with a crooked broker--
should these investors be subject to clawback litigation.
The opposition to this amendment has mainly come from the SEC/SIPC
and Wall Street which seek to protect SIPC's right of subrogation,
therefore taking money again from the victims and giving it back to
SIPC. Not only is this disingenuous, but it shifts the burden of the
financial loss to every taxpayer in America.
The importance of this amendment is that SIPA was intended to instill
confidence in the capital markets and impose upon the SEC the
responsibility to monitor and supervise those markets.
The idea that SIPC or the courts would hold innocent investors, who
relied upon the SEC's endorsement of Madoff, to suffer judgments for
amounts they took out of their accounts in good faith, is upsetting.
One proposal suggests that clawbacks be allowed against so-called
``negligent'' investors. How could they be negligent if the SEC and
FINRA never spotted the fraud over a 20 year period? In fact, in 1992,
the SEC endorsed Madoff as safe.
Shouldn't that affirmative statement be enough to shield investors
from being accused of ``negligence?''
At a minimum, a defense against ``negligence'' requires innocent
investors to spend vast amounts of money defending their conduct
against a SIPC-funded trustee, who while making $1.4 million in fees
per week, has
[[Page H5260]]
every incentive to prolong litigation against them.
As a practical matter, the court could say that every Madoff investor
was negligent because they never uncovered the crime.
We should be protecting innocent victims of the SEC's negligence, not
protecting Wall Street and its stepchild, SIPC.
Another amendment I proposed would have provided for immediate
payment to all Ponzi scheme victims of up to $500,000 in SIPC
insurance. That payment should be based upon the last statement the
victims' received from their broker. This amendment also clarifies that
any person who invested in an ERISA-approved retirement plan is a
``customer'' under SIPA.
Americans have a right to rely upon the statements they receive from
SEC-regulated broker/dealers. This was the Congressional purpose of
SIPA in 1970 and it remains so today.
Tens of thousands of Americans have lost their life savings because
of the inaction of the SEC and its failure to close down the operations
of Bernard Madoff, Allen Stanford, and others. Let's do the right thing
for these people.
The President said he does not want BP to nickel and dime the oil
spill victims, why is it OK to nickel and dime victims of the SEC?
These people lost their life savings because of the greed of Wall
Street and the inaction of the SEC.
We should have added these much needed amendments in order to ensure
innocent investors that the American financial system is not rigged
against them.
Mr. DINGELL. Madam Speaker, I stood before this body in 1999 and gave
full-throated opposition to the repeal of the Glass-Steagall Act. My
opposition had the merit of being correct a decade ago and, at the very
least, prophetic today. Indeed, Graham-Leach-Bliley gave rise to the
creation of financial juggernauts, whose underhanded actions, gone
unregulated by design of that Act and subsequent deregulation, have
driven this great country over an economic precipice of proportions not
seen since the Great Depression.
I will vote in favor of the conference report today because it is, at
its core, a good bill. In so doing, however, I admonish legislators and
regulators alike never again to permit another economic calamity for
want of vigilance. While history judges us for what we do, it will also
condemn us for what we do not.
The SPEAKER pro tempore. Pursuant to House Resolution 1490, the
previous question is ordered.
Motion to Recommit
Mr. BACHUS. Mr. Speaker, I have a motion to recommit with
instructions at the desk.
The SPEAKER pro tempore. Is the gentleman opposed to the conference
report?
Mr. BACHUS. Yes.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:
Mr. Bachus moves to recommit the bill H.R. 4173 to the
conference on the disagreeing votes of the two Houses on the
Senate amendment to the bill H.R. 4173 and to instruct the
managers as follows:
(1) To disagree to section 1109 (relating to the GAO audit
of the Federal Reserve facilities) of the conference report.
(2) To insist on section 1254(c) (relating to audits of the
Federal Reserve), other than paragraph (1) of such section
1254(c), of the House bill.
(3) To insist on section 4s(e)(8) of the Commodity Exchange
Act (relating to initial and variation margin), as proposed
to be added by section 731 of the Senate amendment.
(4) To insist on section 15F(e)(8) of the Securities
Exchange Act of 1934 (relating to initial and variation
margin), as proposed to be added by section 764 of the Senate
amendment.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. BACHUS. Mr. Speaker, on that I demand the yeas and nays.
Parliamentary Inquiry
Mr. FRANK of Massachusetts. Parliamentary inquiry, Mr. Speaker.
The SPEAKER pro tempore. The gentleman will state his inquiry.
Mr. FRANK of Massachusetts. This is a legitimate parliamentary
inquiry, probably the first one I have ever made or heard. But there
was a lot of confusion.
Is it the case apparently that there is no debate on a motion to
recommit on a conference report?
The SPEAKER pro tempore. The gentleman is correct. There is no debate
on this motion to recommit.
The yeas and nays have been demanded.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 and clause 9 of rule
XX, this 15-minute vote on the motion to recommit will be followed by
5-minute votes on adoption of the conference report, if ordered, and
the motion to suspend the rules on H.R. 4445, if ordered.
The vote was taken by electronic device, and there were--yeas 198,
nays 229, not voting 5, as follows:
[Roll No. 412]
YEAS--198
Aderholt
Akin
Alexander
Austria
Bachmann
Bachus
Barrett (SC)
Bartlett
Barton (TX)
Biggert
Bilbray
Bilirakis
Blackburn
Blunt
Boehner
Bonner
Bono Mack
Boozman
Boucher
Boustany
Brady (TX)
Broun (GA)
Brown (SC)
Brown-Waite, Ginny
Buchanan
Burgess
Burton (IN)
Buyer
Calvert
Camp
Campbell
Cantor
Cao
Capito
Carney
Carter
Cassidy
Castle
Chaffetz
Childers
Coble
Coffman (CO)
Cole
Conaway
Crenshaw
Critz
Culberson
Davis (KY)
Dent
Diaz-Balart, L.
Diaz-Balart, M.
Djou
Dreier
Duncan
Edwards (TX)
Ehlers
Emerson
Fallin
Flake
Fleming
Forbes
Fortenberry
Foxx
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Giffords
Gingrey (GA)
Gohmert
Goodlatte
Granger
Graves (GA)
Graves (MO)
Grayson
Griffith
Guthrie
Hall (TX)
Harper
Hastings (WA)
Heller
Hensarling
Herger
Hodes
Hoekstra
Hunter
Inglis
Issa
Jenkins
Johnson (IL)
Johnson, Sam
Jones
Jordan (OH)
King (IA)
King (NY)
Kingston
Kirk
Kirkpatrick (AZ)
Kline (MN)
Kratovil
Lamborn
Lance
Latham
LaTourette
Latta
Lee (NY)
Lewis (CA)
Linder
Lipinski
LoBiondo
Lucas
Luetkemeyer
Lummis
Lungren, Daniel E.
Mack
Manzullo
Marchant
Markey (CO)
McCarthy (CA)
McCaul
McClintock
McCotter
McHenry
McIntyre
McKeon
McMorris Rodgers
McNerney
Mica
Miller (FL)
Miller (MI)
Miller, Gary
Minnick
Mitchell
Moran (KS)
Murphy, Tim
Myrick
Neugebauer
Nunes
Nye
Olson
Paul
Paulsen
Pence
Perriello
Petri
Pitts
Platts
Poe (TX)
Posey
Price (GA)
Putnam
Radanovich
Rehberg
Reichert
Roe (TN)
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Rooney
Ros-Lehtinen
Roskam
Ross
Royce
Ryan (WI)
Scalise
Schmidt
Schock
Sensenbrenner
Sessions
Shadegg
Shimkus
Shuster
Simpson
Skelton
Smith (NE)
Smith (NJ)
Smith (TX)
Space
Stearns
Sullivan
Teague
Terry
Thompson (PA)
Thornberry
Tiahrt
Tiberi
Titus
Turner
Upton
Walden
Westmoreland
Whitfield
Wilson (SC)
Wittman
Wolf
Young (FL)
NAYS--229
Ackerman
Adler (NJ)
Altmire
Andrews
Arcuri
Baca
Baird
Baldwin
Barrow
Bean
Becerra
Berkley
Berman
Berry
Bishop (GA)
Bishop (NY)
Blumenauer
Boccieri
Boren
Boswell
Boyd
Brady (PA)
Braley (IA)
Bright
Brown, Corrine
Butterfield
Capps
Capuano
Cardoza
Carnahan
Carson (IN)
Castor (FL)
Chandler
Chu
Clarke
Clay
Cleaver
Clyburn
Cohen
Connolly (VA)
Conyers
Cooper
Costa
Costello
Courtney
Crowley
Cuellar
Cummings
Dahlkemper
Davis (AL)
Davis (CA)
Davis (IL)
Davis (TN)
DeFazio
DeGette
Delahunt
DeLauro
Deutch
Dicks
Dingell
Doggett
Donnelly (IN)
Doyle
Driehaus
Edwards (MD)
Ellison
Ellsworth
Engel
Eshoo
Etheridge
Farr
Fattah
Filner
Foster
Frank (MA)
Fudge
Garamendi
Gonzalez
Gordon (TN)
Green, Al
Green, Gene
Grijalva
Gutierrez
Hall (NY)
Halvorson
Hare
Harman
Hastings (FL)
Heinrich
Herseth Sandlin
Higgins
Hill
Himes
Hinchey
Hinojosa
Hirono
Holden
Holt
Honda
Hoyer
Inslee
Israel
Jackson (IL)
Jackson Lee (TX)
Johnson (GA)
Johnson, E. B.
Kagen
Kanjorski
Kaptur
Kennedy
Kildee
Kilpatrick (MI)
Kilroy
Kind
Kissell
Klein (FL)
[[Page H5261]]
Kosmas
Kucinich
Langevin
Larsen (WA)
Larson (CT)
Lee (CA)
Levin
Lewis (GA)
Loebsack
Lofgren, Zoe
Lowey
Lujan
Lynch
Maffei
Maloney
Markey (MA)
Marshall
Matheson
Matsui
McCarthy (NY)
McCollum
McDermott
McGovern
McMahon
Meek (FL)
Meeks (NY)
Melancon
Michaud
Miller (NC)
Miller, George
Mollohan
Moore (KS)
Moore (WI)
Moran (VA)
Murphy (CT)
Murphy (NY)
Murphy, Patrick
Nadler (NY)
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor (AZ)
Payne
Perlmutter
Peters
Peterson
Pingree (ME)
Polis (CO)
Pomeroy
Price (NC)
Quigley
Rahall
Rangel
Reyes
Richardson
Rodriguez
Rothman (NJ)
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Salazar
Sanchez, Linda T.
Sanchez, Loretta
Sarbanes
Schakowsky
Schauer
Schiff
Schrader
Schwartz
Scott (GA)
Scott (VA)
Serrano
Sestak
Shea-Porter
Sherman
Shuler
Sires
Slaughter
Smith (WA)
Snyder
Speier
Spratt
Stark
Stupak
Sutton
Tanner
Thompson (CA)
Thompson (MS)
Tierney
Tonko
Towns
Tsongas
Van Hollen
Velazquez
Visclosky
Walz
Wasserman Schultz
Waters
Watson
Watt
Waxman
Weiner
Welch
Wilson (OH)
Wu
Yarmuth
NOT VOTING--5
Bishop (UT)
Taylor
Wamp
Woolsey
Young (AK)
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (during the vote). There are 2 minutes
remaining in this vote.
{time} 1846
Messrs. OLVER, BRADY of Pennsylvania, POLIS, PRICE of North Carolina,
JOHNSON of Georgia, Ms. CORRINE BROWN of Florida, Messrs. AL GREEN of
Texas, POMEROY, Ms. SCHAKOWSKY, Messrs. MOLLOHAN, DINGELL, VISCLOSKY,
GUTIERREZ and CONYERS changed their vote from ``yea'' to ``nay.''
Mr. GOODLATTE, Mrs. KIRKPATRICK of Arizona, Mrs. BACHMANN, Mr.
EDWARDS of Texas, Ms. FOXX and Mr. BILBRAY changed their vote from
``nay'' to ``yea.''
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore. The question is on the conference report.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. FRANK of Massachusetts. Mr. Speaker, on that I demand the yeas
and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. This is a 5-minute vote.
The vote was taken by electronic device, and there were--yeas 237,
nays 192, not voting 4, as follows:
[Roll No. 413]
YEAS--237
Ackerman
Adler (NJ)
Altmire
Andrews
Arcuri
Baca
Baird
Baldwin
Barrow
Bean
Becerra
Berkley
Berman
Bishop (GA)
Bishop (NY)
Blumenauer
Boccieri
Boswell
Boyd
Brady (PA)
Braley (IA)
Brown, Corrine
Butterfield
Cao
Capps
Capuano
Cardoza
Carnahan
Carney
Carson (IN)
Castle
Castor (FL)
Chu
Clarke
Clay
Cleaver
Clyburn
Cohen
Connolly (VA)
Conyers
Costa
Costello
Courtney
Crowley
Cummings
Dahlkemper
Davis (AL)
Davis (CA)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutch
Dicks
Dingell
Doggett
Donnelly (IN)
Doyle
Driehaus
Edwards (MD)
Ellison
Ellsworth
Engel
Eshoo
Etheridge
Farr
Fattah
Filner
Foster
Frank (MA)
Fudge
Garamendi
Giffords
Gonzalez
Gordon (TN)
Grayson
Green, Al
Green, Gene
Grijalva
Gutierrez
Hall (NY)
Halvorson
Hare
Harman
Hastings (FL)
Heinrich
Herseth Sandlin
Higgins
Hill
Himes
Hinchey
Hinojosa
Hirono
Hodes
Holden
Holt
Honda
Hoyer
Inslee
Israel
Jackson (IL)
Jackson Lee (TX)
Johnson (GA)
Johnson, E. B.
Jones
Kagen
Kanjorski
Kennedy
Kildee
Kilpatrick (MI)
Kilroy
Kind
Kissell
Klein (FL)
Kosmas
Kratovil
Kucinich
Langevin
Larsen (WA)
Larson (CT)
Lee (CA)
Levin
Lewis (GA)
Lipinski
Loebsack
Lofgren, Zoe
Lowey
Lujan
Lynch
Maffei
Maloney
Markey (CO)
Markey (MA)
Marshall
Matheson
Matsui
McCarthy (NY)
McCollum
McDermott
McGovern
McMahon
McNerney
Meek (FL)
Meeks (NY)
Melancon
Michaud
Miller (NC)
Miller, George
Minnick
Mollohan
Moore (KS)
Moore (WI)
Moran (VA)
Murphy (CT)
Murphy (NY)
Murphy, Patrick
Nadler (NY)
Napolitano
Neal (MA)
Nye
Oberstar
Obey
Olver
Ortiz
Pallone
Pascrell
Pastor (AZ)
Payne
Pelosi
Perlmutter
Peters
Peterson
Pingree (ME)
Polis (CO)
Pomeroy
Price (NC)
Quigley
Rahall
Rangel
Reyes
Richardson
Rodriguez
Rothman (NJ)
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Salazar
Sanchez, Linda T.
Sanchez, Loretta
Sarbanes
Schakowsky
Schauer
Schiff
Schrader
Schwartz
Scott (GA)
Scott (VA)
Serrano
Sestak
Shea-Porter
Sherman
Shuler
Sires
Slaughter
Smith (WA)
Snyder
Space
Speier
Spratt
Stark
Stupak
Sutton
Tanner
Teague
Thompson (CA)
Thompson (MS)
Tierney
Titus
Tonko
Towns
Tsongas
Van Hollen
Velazquez
Visclosky
Walz
Wasserman Schultz
Waters
Watson
Watt
Waxman
Weiner
Welch
Wilson (OH)
Wu
Yarmuth
NAYS--192
Aderholt
Akin
Alexander
Austria
Bachmann
Bachus
Barrett (SC)
Bartlett
Barton (TX)
Berry
Biggert
Bilbray
Bilirakis
Bishop (UT)
Blackburn
Blunt
Boehner
Bonner
Bono Mack
Boozman
Boren
Boucher
Boustany
Brady (TX)
Bright
Broun (GA)
Brown (SC)
Brown-Waite, Ginny
Buchanan
Burgess
Burton (IN)
Buyer
Calvert
Camp
Campbell
Cantor
Capito
Carter
Cassidy
Chaffetz
Chandler
Childers
Coble
Coffman (CO)
Cole
Conaway
Cooper
Crenshaw
Critz
Cuellar
Culberson
Davis (KY)
Davis (TN)
Dent
Diaz-Balart, L.
Diaz-Balart, M.
Djou
Dreier
Duncan
Edwards (TX)
Ehlers
Emerson
Fallin
Flake
Fleming
Forbes
Fortenberry
Foxx
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gingrey (GA)
Gohmert
Goodlatte
Granger
Graves (GA)
Graves (MO)
Griffith
Guthrie
Hall (TX)
Harper
Hastings (WA)
Heller
Hensarling
Herger
Hoekstra
Hunter
Inglis
Issa
Jenkins
Johnson (IL)
Johnson, Sam
Jordan (OH)
Kaptur
King (IA)
King (NY)
Kingston
Kirk
Kirkpatrick (AZ)
Kline (MN)
Lamborn
Lance
Latham
LaTourette
Latta
Lee (NY)
Lewis (CA)
Linder
LoBiondo
Lucas
Luetkemeyer
Lummis
Lungren, Daniel E.
Mack
Manzullo
Marchant
McCarthy (CA)
McCaul
McClintock
McCotter
McHenry
McIntyre
McKeon
McMorris Rodgers
Mica
Miller (FL)
Miller (MI)
Miller, Gary
Mitchell
Moran (KS)
Murphy, Tim
Myrick
Neugebauer
Nunes
Olson
Owens
Paul
Paulsen
Pence
Perriello
Petri
Pitts
Platts
Poe (TX)
Posey
Price (GA)
Putnam
Radanovich
Rehberg
Reichert
Roe (TN)
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Rooney
Ros-Lehtinen
Roskam
Ross
Royce
Ryan (WI)
Scalise
Schmidt
Schock
Sensenbrenner
Sessions
Shadegg
Shimkus
Shuster
Simpson
Skelton
Smith (NE)
Smith (NJ)
Smith (TX)
Stearns
Sullivan
Terry
Thompson (PA)
Thornberry
Tiahrt
Tiberi
Turner
Upton
Walden
Westmoreland
Whitfield
Wilson (SC)
Wittman
Wolf
Young (FL)
NOT VOTING--4
Taylor
Wamp
Woolsey
Young (AK)
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (during the vote). Two minutes remain in this
vote.
{time} 1854
So the conference report was agreed to.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________