[Congressional Record Volume 162, Number 172 (Thursday, December 1, 2016)]
[House]
[Pages H7074-H7086]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           SYSTEMIC RISK DESIGNATION IMPROVEMENT ACT OF 2016

  Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 934, I call 
up the bill (H.R. 6392) to amend the Dodd-Frank Wall Street Reform and 
Consumer Protection Act to specify when bank holding companies may be 
subject to certain enhanced supervision, 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 934, the bill 
is considered read.
  The text of the bill is as follows:

                               H.R. 6392

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Systemic Risk Designation 
     Improvement Act of 2016''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for the Dodd-Frank Wall Street Reform 
     and Consumer Protection Act (12 U.S.C. 5301 et seq.) is 
     amended by striking the item relating to section 113 and 
     inserting the following:

``Sec. 113. Authority to require enhanced supervision and regulation of 
              certain nonbank financial companies and certain bank 
              holding companies.''.

     SEC. 3. REVISIONS TO COUNCIL AUTHORITY.

       (a) Purposes and Duties.--Section 112 of the Dodd-Frank 
     Wall Street Reform and Consumer Protection Act (12 U.S.C. 
     5322) is amended in subsection (a)(2)(I) by inserting before 
     the semicolon ``, which have been the subject of a final 
     determination under section 113''.
       (b) Bank Holding Company Designation.--Section 113 of the 
     Dodd-Frank Wall Street Reform and Consumer Protection Act (12 
     U.S.C. 5323) is amended--
       (1) by amending the heading for such section to read as 
     follows: ``authority to require enhanced supervision and 
     regulation of certain nonbank financial companies and certain 
     bank holding companies'';
       (2) by redesignating subsections (c), (d), (e), (f), (g), 
     (h), and (i) as subsections (d), (e), (f), (g), (h), (i), and 
     (j), respectively;
       (3) by inserting after subsection (b) the following:
       ``(c) Bank Holding Companies Subject to Enhanced 
     Supervision and Prudential Standards Under Section 165.--
       ``(1) Determination.--The Council, on a nondelegable basis 
     and by a vote of not fewer than \2/3\ of the voting members 
     then serving, including an affirmative vote by the 
     Chairperson, may determine that a bank holding company shall 
     be subject to enhanced supervision and prudential standards 
     by the Board of Governors, in accordance with section 165, if 
     the Council determines, based on the considerations in 
     paragraph (2), that material financial distress at the bank 
     holding company, or the nature, scope, size, scale, 
     concentration, interconnectedness, or mix of the activities 
     of the bank holding company, could pose a threat to the 
     financial stability of the United States.
       ``(2) Considerations.--In making a determination under 
     paragraph (1), the Council shall use the indicator-based 
     measurement approach established by the Basel Committee on 
     Banking Supervision to determine systemic importance, which 
     considers--
       ``(A) the size of the bank holding company;
       ``(B) the interconnectedness of the bank holding company;
       ``(C) the extent of readily available substitutes or 
     financial institution infrastructure for the services of the 
     bank holding company;
       ``(D) the global cross-jurisdictional activity of the bank 
     holding company; and
       ``(E) the complexity of the bank holding company.
       ``(3) GSIBs designated by operation of law.--
     Notwithstanding any other provision of this subsection, a 
     bank holding company that is designated, as of the date of 
     enactment of this subsection, as a Global Systemically 
     Important Bank by the Financial Stability Board shall be 
     deemed to have been the subject of a final determination 
     under paragraph (1).'';
       (4) in subsection (d), as so redesignated--
       (A) in paragraph (1)(A), by striking ``subsection (a)(2) or 
     (b)(2)'' and inserting ``subsection (a)(2), (b)(2), or 
     (c)(2)''; and
       (B) in paragraph (4), by striking ``Subsections (d) through 
     (h)'' and inserting ``Subsections (e) through (i)'';
       (5) in subsections (e), (f), (g), (h), (i), and (j)--
       (A) by striking ``subsections (a) and (b)'' each place such 
     term appears and inserting ``subsections (a), (b), and (c)''; 
     and
       (B) by striking ``nonbank financial company'' each place 
     such term appears and inserting ``bank holding company for 
     which there has been a determination under subsection (c) or 
     nonbank financial company'';
       (6) in subsection (g), as so redesignated, by striking 
     ``subsection (e)'' and inserting ``subsection (f)'';
       (7) in subsection (h), as so redesignated, by striking 
     ``subsection (a), (b), or (c)'' and inserting ``subsection 
     (a), (b), (c), or (d)''; and
       (8) in subsection (i), as so redesignated, by striking 
     ``subsection (d)(2), (e)(3), or (f)(5)'' and inserting 
     ``subsection (e)(2), (f)(3), or (g)(5)''.
       (c) Enhanced Supervision.--Section 115 of the Dodd-Frank 
     Wall Street Reform and Consumer Protection Act (12 U.S.C. 
     5325) is amended--
       (1) in subsection (a)(1), by striking ``large, 
     interconnected bank holding companies'' and inserting ``bank 
     holding companies which have been the subject of a final 
     determination under section 113'';
       (2) in subsection (a)(2)--
       (A) in subparagraph (A), by striking ``; or'' at the end 
     and inserting a period;
       (B) by striking ``the Council may'' and all that follows 
     through ``differentiate'' and inserting ``the Council may 
     differentiate''; and
       (C) by striking subparagraph (B); and
       (3) in subsection (b)(3), by striking ``subsections (a) and 
     (b) of section 113'' each place

[[Page H7075]]

     such term appears and inserting ``subsections (a), (b), and 
     (c) of section 113''.
       (d) Reports.--Section 116(a) of the Dodd-Frank Wall Street 
     Reform and Consumer Protection Act (12 U.S.C. 5326(a)) is 
     amended by striking ``with total consolidated assets of 
     $50,000,000,000 or greater'' and inserting ``which has been 
     the subject of a final determination under section 113''.
       (e) Mitigation.--Section 121 of the Dodd-Frank Wall Street 
     Reform and Consumer Protection Act (12 U.S.C. 5331) is 
     amended--
       (1) in subsection (a), by striking ``with total 
     consolidated assets of $50,000,000,000 or more'' and 
     inserting ``which has been the subject of a final 
     determination under section 113''; and
       (2) in subsection (c), by striking ``subsection (a) or (b) 
     of section 113'' and inserting ``subsection (a), (b), or (c) 
     of section 113''.
       (f) Office of Financial Research.--Section 155 of the Dodd-
     Frank Wall Street Reform and Consumer Protection Act (12 
     U.S.C. 5345) is amended in subsection (d) by striking ``with 
     total consolidated assets of 50,000,000,000 or greater'' and 
     inserting ``which have been the subject of a final 
     determination under section 113''.

     SEC. 4. REVISIONS TO BOARD AUTHORITY.

       (a) Acquisitions.--Section 163 of the Dodd-Frank Wall 
     Street Reform and Consumer Protection Act (12 U.S.C. 5363) is 
     amended by striking ``with total consolidated assets equal to 
     or greater than $50,000,000,000'' each place such term 
     appears and inserting ``which has been the subject of a final 
     determination under section 113''.
       (b) Management Interlocks.--Section 164 of the Dodd-Frank 
     Wall Street Reform and Consumer Protection Act (12 U.S.C. 
     5364) is amended by striking ``with total consolidated assets 
     equal to or greater than $50,000,000,000'' and inserting 
     ``which has been the subject of a final determination under 
     section 113''.
       (c) Enhanced Supervision and Prudential Standards.--Section 
     165 of the Dodd-Frank Wall Street Reform and Consumer 
     Protection Act (12 U.S.C. 5365) is amended--
       (1) in subsection (a), by striking ``with total 
     consolidated assets equal to or greater than 
     $50,000,000,000'' and inserting ``which have been the subject 
     of a final determination under section 113'';
       (2) in subsection (a)(2)--
       (A) by striking ``(A) In general.--''; and
       (B) by striking subparagraph (B);
       (3) by striking ``subsections (a) and (b) of section 113'' 
     each place such term appears and inserting ``subsections (a), 
     (b), and (c) of section 113''; and
       (4) in subsection (j), by striking ``with total 
     consolidated assets equal to or greater than 
     $50,000,000,000'' and inserting ``which has been the subject 
     of a final determination under section 113''.
       (d) Conforming Amendment.--The second subsection (s) 
     (relating to ``Assessments, Fees, and Other Charges for 
     Certain Companies'') of section 11 of the Federal Reserve Act 
     (12 U.S.C. 248) is amended--
       (1) by redesignating such subsection as subsection (t); and
       (2) in paragraph (2)--
       (A) in subparagraph (A), by striking ``having total 
     consolidated assets of $50,000,000,000 or more;'' and 
     inserting ``which have been the subject of a final 
     determination under section 113 of the Dodd-Frank Wall Street 
     Reform and Consumer Protection Act; and'';
       (B) by striking subparagraph (B); and
       (C) by redesignating subparagraph (C) as subparagraph (B).

     SEC. 5. EFFECTIVE DATE; RULE OF APPLICATION.

       (a) Effective Date.--The Financial Stability Oversight 
     Council may begin proceedings with respect to a bank holding 
     company under section 113(c)(1) of the Dodd-Frank Wall Street 
     Reform and Consumer Protection Act, as added by this Act, on 
     the date of the enactment of this Act, but may not make a 
     final determination under such section 113(c)(1) with respect 
     to a bank holding company before the end of the 1-year period 
     beginning on the date of the enactment of this Act.
       (b) Immediate Application to Large Bank Holding 
     Companies.--During the 1-year period described under 
     subsection (a), a bank holding company with total 
     consolidated assets equal to or greater than $50,000,000,000 
     shall be deemed to have been the subject of a final 
     determination under section 113(c)(1) of the Dodd-Frank Wall 
     Street Reform and Consumer Protection Act.

     SEC. 6. EXISTING ASSESSMENT TERMINATION SCHEDULE.

       (a) Temporary Extension of Existing Assessment.--
       (1) In general.--Each bank holding company with total 
     consolidated assets equal to or greater than $50,000,000,000 
     and which has not been the subject of a final determination 
     under section 113 of the Dodd-Frank Wall Street Reform and 
     Consumer Protection Act (12 U.S.C. 5323) shall be subject to 
     assessments by the Secretary of the Treasury to the same 
     extent as a bank holding company that has been subject to 
     such a final determination.
       (2) Limitation on amount of assessments.--The aggregate 
     amount collected pursuant to paragraph (1) from all bank 
     holding companies assessed under such paragraph shall be 
     $115,000,000.
       (3) Expedited assessments.--If necessary, the Secretary of 
     the Treasury shall expedite assessments made pursuant to 
     paragraph (1) to ensure that all $115,000,000 of assessments 
     permitted by paragraph (2) is collected before fiscal year 
     2018.
       (4) Payment period options.--The Secretary of the Treasury 
     shall offer the option of payments spread out before the end 
     of fiscal year 2018, or shorter periods including the option 
     of a one-time payment, at the discretion of each bank holding 
     company paying assessments pursuant to paragraph (1).
       (5) Assessments to be made in addition to any other 
     assessments.--The assessments collected pursuant to paragraph 
     (1) shall be in addition to, and not as a replacement of, any 
     assessments required under any other law.
       (b) Use of Assessments.--Of the total amount collected 
     pursuant to subsection (a)--
       (1) $60,000,000 shall be transferred to the Financial 
     Stability Oversight Council to pay for any administrative 
     costs resulting from this Act and the amendments made by this 
     Act, of which the Financial Stability Oversight Council shall 
     distribute $20,000,000 to the Board of Governors of the 
     Federal Reserve System, $20,000,000 to the Federal Deposit 
     Insurance Corporation, and $20,000,000 to the general fund of 
     the Treasury; and
       (2) $55,000,000 shall be transferred to the Federal Deposit 
     Insurance Corporation to pay for any resolution costs 
     resulting from this Act and the amendments made by this Act.
       (c) Treatment Upon Determination.--A bank holding company 
     assessed under this section shall no longer be subject to 
     such assessments in the event it is subject to a final 
     determination under section 113 of the Dodd-Frank Wall Street 
     Reform and Consumer Protection Act (12 U.S.C. 5323). Any 
     prior payments made by such a banking holding company 
     pursuant to an assessment under this section shall be 
     nonrefundable.
       (d) Rule of Construction.--A bank holding company deemed to 
     have been the subject of a final determination under section 
     113 of the Dodd-Frank Wall Street Reform and Consumer 
     Protection Act (12 U.S.C. 5323) under section 5(b) shall not 
     be subject to assessments under subsection (a) solely by 
     operation of section 5(b).

  The SPEAKER pro tempore. The bill shall be debatable for 1 hour, 
equally divided and controlled by the chair and ranking minority member 
of the Committee on Financial Services.
  After 1 hour of debate, it shall be in order to consider the 
amendment printed in part B of House Report 114-839, if offered by the 
Member designated in the report, which shall be considered read, shall 
be separately debatable for the time specified in the report equally 
divided and controlled by the proponent and an opponent, and shall not 
be subject to a demand for a division of the question.
  The gentleman from Texas (Mr. Hensarling) and the gentlewoman from 
California (Ms. Maxine Waters) each will control 30 minutes.
  The Chair recognizes the gentleman from Texas.


                             General Leave

  Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in which to revise and extend their remarks 
and submit extraneous materials on the bill under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of H.R. 6392, the Systemic Risk 
Designation Improvement Act, which is a very important bill cosponsored 
by a bipartisan group of Members of the House, the text of which was 
approved by our committee with a strong bipartisan support of 39-16.
  I thank Chairman Luetkemeyer, chairman of our Subcommittee on Housing 
and Insurance, one of the key leaders on our Committee on Financial 
Services, for his leadership and for introducing this legislation. He 
has led these efforts valiantly to reform a flawed and arbitrary 
framework used by regulators to designate so-called systemically 
important financial institutions, also known as SIFIs. Designation, Mr. 
Speaker, anoints these institutions as too big to fail, meaning that 
today's SIFI designations are tomorrow's tax-funded bailouts.
  It is clear that this issue has found, again, a fair amount of 
consensus on both sides of the aisle, and this legislation represents a 
very good-faith effort by the gentleman from Missouri to forge a 
bipartisan piece of legislation that, at the very least, at the 
minimum, would get rid of a totally arbitrary and static threshold 
currently used to designate institutions as systemically important.
  Mr. Speaker, I speak for many on this floor when I say I do not 
believe in the SIFI architecture at all. I think it

[[Page H7076]]

is harmful. I think it is dangerous, and clearly it should be replaced 
by high levels of loss-absorbing private capital. But that is not what 
we are debating today.
  Today in the 114th Congress, we continue to try to find a bipartisan 
consensus to support needed reforms; and, again, that is what this bill 
is: bipartisan. It recognizes that regulations should consider 
different components of risk and not simply a Washington one-size-fits-
all definition.
  The current approach--and this is very important, Mr. Speaker, as the 
coauthor of the Dodd-Frank Act, himself, admits--is a mistake. It is a 
mistake because it fails to take into account differences in the 
various business models or systemic risk institutions pose to our 
financial system. In fact, it is indisputable that the asset threshold 
used in Dodd-Frank is not based on a logical formula, on research, or 
on any evidence at all. Instead, it is simply a random number picked 
out of thin air.
  Concerns with this arbitrary number have been recognized, as I just 
mentioned, by none other than former Committee on Financial Services 
Chairman Barney Frank, himself. As I recall, he is the Frank of Dodd-
Frank. In testimony before our committee, Mr. Speaker, former Chairman 
Frank agreed that the threshold he wrote into law was ``arbitrary.'' He 
expressed support for adjusting it. Then just last week, he stated the 
asset threshold was a ``mistake.'' I hope all Members on the other side 
of the aisle take careful note.
  Federal Reserve Board member Dan Tarullo has also expressed 
skepticism, as has the Comptroller of the Currency Thomas Curry. Even 
the ranking member, the Democrat ranking member of the Senate Banking 
Committee, Senator Sherrod Brown, has stated: ``I do agree that some 
banks above $50 billion should not''--not--``be regulated like Wall 
Street megabanks.''
  So what we are trying to do here today with this bipartisan bill is 
trying to provide a solution to try to fix a generally recognized 
mistake in Dodd-Frank, and what those who oppose the bill are trying to 
do is to preserve that mistake in the law. Perhaps again, Mr. Speaker, 
some of my colleagues need to be reminded that small banks on Main 
Street and even our regional banks did not cause the financial crisis, 
and arbitrarily painting big banks and small and midsized banks with 
exactly the same broad brush is wrong. It is bad policy, and it is bad 
for our economy.
  So the discussion today, Mr. Speaker, should instead focus on the 
appropriate measure of systemic importance and the regulatory burden 
imposed by the so-called enhanced prudential standards once an 
institution has been designated. By focusing exclusively on asset size, 
you ignore other factors that may be more relevant in determining 
whether a financial institution should be subject to, again, so-called 
enhanced prudential standards. Furthermore, an asset-based approach 
does not capture the types of risk that enhanced prudential standards 
are designed to mitigate in the first place.
  By determining risk using activity-based standards, no matter how 
flawed these standards may be, our regulators would be better equipped 
to differentiate between stable activities and those that may pose a 
threat to financial stability. It would allow more precision in 
identifying systemic importance, while also providing flexibility for 
institutions engaging in more prudent lending activities.
  Mr. Speaker, it is just so important that we note the effect these 
regulations are having today on the U.S. economy. They are harming our 
economy. Instead of helping to capitalize small businesses, leading to 
more jobs and opportunity for people who still lack both, financial 
institutions are, instead, having to expend capital on compliance, 
compliance that even the coauthor of Dodd-Frank admits is a mistake.
  Mr. Speaker, regrettably, I need not remind us that we remain stuck 
in the slowest and weakest economic recovery since the end of World War 
II. The economy simply is not working for working Americans. They can't 
get ahead, and they fear for the future of their families. Their 
paychecks have remained stagnant. Their savings have declined. The 
American people deserve better.
  I urge adoption of this measure. I thank Chairman Luetkemeyer for his 
leadership in forging this bipartisan consensus solution. I urge us to 
correct this Dodd-Frank mistake.
  Mr. Speaker, I reserve the balance of my time.

                                      Committee on Ways and Means,


                                     House of Representatives,

                                Washington, DC, November 29, 2016.
     Hon. Jeb Hensarling,
     Chairman, Committee on Financial Services.
       Dear Chairman Hensarling: I am writing concerning H.R. 
     6392, the ``Systemic Risk Designation Improvement Act of 
     2016.'' This legislation contains provisions that fall within 
     the Ways and Means Committee's Rule X jurisdiction over 
     revenue.
       I appreciate your willingness to work with me on the 
     provisions in my Committee's jurisdiction. In order to allow 
     H.R. 6392 to move expeditiously to the House floor, I agree 
     not to seek a sequential referral on this bill. The Committee 
     on Ways and Means takes this action with our mutual 
     understanding that by foregoing formal action on H.R. 6392, 
     we do not waive any jurisdiction over subject matter 
     contained in this or similar legislation, and that our 
     Committee will be appropriately consulted and involved as 
     this bill or similar legislation moves forward. Our Committee 
     also reserves the right to seek appointment of an appropriate 
     number of conferees to any House-Senate conference involving 
     this or similar legislation, and asks that you support any 
     such request.
       I would appreciate your response to this letter confirming 
     this understanding, and would request that you include a copy 
     of this letter and your response in the Congressional Record 
     during the floor consideration of this bill. Thank you in 
     advance for your cooperation.
           Sincerely,
                                                      Kevin Brady,
     Chairman.
                                  ____

                                  Committee on Financial Services,


                                     House of Representatives,

                                Washington, DC, November 29, 2016.
     Hon. Kevin Brady,
     Chairman, Ways and Means Committee.
       Dear Chairman Brady: Thank you for your November 29th 
     letter regarding H.R. 6392, the ``Systemic Risk Designation 
     Improvement Act of 2016.''
       I am most appreciative of your decision to forego action on 
     H.R. 6392 so that it may move expeditiously to the House 
     floor. I acknowledge that although you are waiving action on 
     the bill, the Ways and Means Committee is in no way waiving 
     its jurisdictional interest in this or similar legislation. 
     In addition, if a conference is necessary on this 
     legislation, I will support any request that your committee 
     be represented therein.
       Finally, I shall be pleased to include your letter and this 
     letter on H.R. 6392 in the Congressional Record during floor 
     consideration of the same.
           Sincerely,
                                                   Jeb Hensarling,
                                                         Chairman.

  Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such 
time as I may consume.
  Mr. Speaker, I rise today in strong opposition to H.R. 6392. This is 
the first step in the Trump agenda to deregulate Wall Street, despite 
candidate Trump's pledges to hold elite bankers accountable. In fact, 
as we debate this bill today, Trump Tower's revolving door is spinning 
with Wall Street insiders.
  Yes, in a skyscraper in midtown Manhattan, Trump and his transition 
team are plotting their agenda to weaken financial reform and bring us 
back to the precrisis Wild West days when banks could gamble with 
taxpayer money. Bank stocks are up on news of gifts to come, and 
newspaper headlines are already documenting Republicans' aggressive 
plans.
  In fact, President-elect Trump just announced that he will nominate 
Steven Mnuchin, a former Goldman Sachs executive who now sits on the 
board of the megabank CIT, to be his Treasury Secretary. Mr. Mnuchin's 
bank is just one of 27 banks that stands to benefit directly from this 
legislation. Though CIT crashed--that is the bank--and went bankrupt 
during the crisis because of high-risk commercial lending and subprime 
loans, somehow Mr. Mnuchin still managed to sign an employment deal, 
handing him $4.5 million a year in 2016. I suppose passing this 
legislation is just the Republican Congress' way of giving him a 
signing bonus for coming into government.
  We enacted the Dodd-Frank Wall Street Reform and Consumer Protection 
Act in response to the stunning greed and regulatory failures in our 
financial system; and yet, with this bill, the Republicans are 
displaying a staggering degree of historical amnesia.

                              {time}  1315

  This bill is the epitome of that dangerous agenda, with H.R. 6392 
gutting

[[Page H7077]]

our banking regulators' oversight of $4.5 trillion in banking assets, 
or approximately 30 percent of the industry currently subject to 
enhanced rules.
  Make no mistake. This bill is not about helping the community banks 
because 99 percent of our country's community banks and credit unions 
are already exempt from most rules in Dodd-Frank. So I don't want 
anybody to come out here saying: we are helping the community banks. 
This has nothing to do with the community banks. This is about 
deregulating the big banks over $50 billion.
  It is also not about tailoring regulations for regional banks. Wall 
Street reform already required that, and the Federal Reserve is already 
taking steps to do so. No, this bill is about a wholesale regulatory 
exemption for just 27 of the biggest banks in America--banks with $100 
billion, $200 billion, and even $400 billion in assets.
  Many of the types of banks that would benefit from this bill failed 
spectacularly during the financial crisis. In fact, large bank holding 
companies with more than $50 billion in assets received twice as much 
bailout money per dollar than banks with less than $50 billion in 
assets.
  Contrary to the talking points from the other side of the aisle, 
these megaregional banks are not just big community banks. No, these 
regional banks are some of the worst players in predatory, subprime 
lending leading up to the financial crisis. They have preyed on 
minority and rural communities and have passed the buck onto taxpayers 
when their bets failed.
  Remember Countrywide, a $200 billion thrift? They were the number 
three subprime mortgage originator and number one issuer of mortgage 
bonds in 2006. They are a poster child of the crisis.
  Remember Washington Mutual, with $300 billion in assets, whose 
hometown paper, The Seattle Times, described as ``predatory''?
  Remember Wachovia, with their exotic ``pick-a-payment'' mortgage 
loans? Remember in October of 2008, when they posted a $24 billion 
quarterly loss and the FDIC had to facilitate a midnight acquisition by 
Wells Fargo?
  Remember New Century, AmeriQuest, or Option One? This bill would 
enable more blowups like these.
  H.R. 6392 would repeal Dodd-Frank's $50 billion threshold above which 
banks are subject to closer regulatory scrutiny and prevent the Federal 
Reserve Board from regulating these banks. Instead, it would hand over 
that responsibility to what is known as FSOC, the Financial Stability 
Oversight Council.
  In order to regulate the banks, the FSOC would have to go through a 
Byzantine and litigious process of designation, which takes 2 to 4 
years to complete. This would give them plenty of time to go back to 
the old ways that Dodd-Frank is trying to prevent. Even if a potential 
Treasury Secretary Mnuchin decided to regulate his former employer, by 
the time he got around to it, the damage would likely already be done.
  It is also significant to note that Republicans have repeatedly tried 
to dismantle the FSOC and its existing designation authority for large 
nonbanks. They have called the Council ``unconstitutional,'' introduced 
bills to make it harder for the FSOC to do its job, and helped 
companies like MetLife fight its designation in court.
  What is more, Chairman Hensarling's sweeping Wall Street deregulation 
bill, the ``Wrong Choice Act,'' would repeal this exact same 
designation authority altogether.
  Why is the majority even considering this bill today when the 
chairman's Wall Street reform repeal package would render this bill 
moot? It is clear that this is just the first act in a long, dangerous 
play that will continue well into next year. I, therefore, urge my 
colleagues to join me in opposing this harmful bill.
  Mr. Speaker, as I said when I took the floor to debate this bill, 
this is the first act in Trump's promise that he is going to 
deregulate, his promise that he is going to get rid of Dodd-Frank, his 
promise that he is going to get rid of the Consumer Financial 
Protection Bureau, and his promise that he is going to, in essence, 
turn all of this back over to Wall Street.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I yield myself 5 seconds just to say, if 
the ranking member believes this is the first act in getting rid of 
Dodd-Frank, she ain't seen nothing yet.
  Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. 
Sessions), the distinguished chairman of the House Rules Committee, and 
I thank him for his leadership in helping bring this bill to the floor.
  Mr. SESSIONS. Mr. Speaker, I thank my dear colleague from Dallas for 
not only yielding, but I want to commend him in working with his 
committee, including the gentleman from Missouri (Mr. Luetkemeyer), on 
this awesome legislation.
  Mr. Speaker, the point is simple: Washington has once again gotten in 
the way of legitimate business and is harming the American people, the 
American economy, and job growth in this country by imposing 
unnecessary and burdensome compliance costs on medium-sized banks all 
across America.
  Asset thresholds, regardless of how high or low, are disincentives to 
growth. There will always be an institution that lies somewhere that is 
slightly above or below some threshold, but the bottom line is that 
arbitrary numbers tell us very little about the risk that is actually 
involved. It is the risk to institutions in America that we should be 
talking about.
  So, simply put, the SIFI designation is arbitrary. It simply subjects 
smaller banks to the same standards as trillion-dollar, globally 
systematic organizations, which is something that would only make sense 
here in Washington.
  The bottom line is, it is an impediment to free economic growth, and 
it is an impediment that is burdening not only our banks but consumers 
also.
  I commend Congressman Luetkemeyer for advancing this important, 
commonsense regulation. By the way, it has taken several years to get 
here.
  We now understand that the American economy can move in the right 
direction. The American economy, with good and proper leadership, not 
only in Washington but by the rules and regulations that are balanced, 
will help United States families, small businesses, and specifically 
smaller banks be more competitive to offer the services that are 
necessary.
  I commend the young chairman of the Financial Services Committee, Mr. 
Hensarling, for allowing this bill to come here today.
  Ms. MAXINE WATERS of California. Mr. Speaker, Democrats, small town 
America, Rust Belt America, you just heard what he said. Mr. Hensarling 
just said: You ain't seen nothing yet. You heard it coming out of his 
mouth as they stand here and defend deregulation of these big banks.
  Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Al 
Green) a member of the Financial Services Committee.
  Mr. AL GREEN of Texas. Mr. Speaker, I think it appropriate to reflect 
for just a moment on what the crisis was like in 2008.
  In 2008, when this crisis hit and it started to blossom, started to 
blow up, banks would not lend to each other. The crisis was so serious 
that banks would not bail each other out.
  We had a circumstance such that people were losing their homes. They 
were losing their homes because of these so-called exotic products that 
allowed them to buy homes that they could not afford, homes that would 
allow them to have a teaser rate that would coincide with a prepayment 
penalty such that they couldn't get out of the rate that was to follow, 
which was going to be higher than they can afford.
  Mr. Speaker, this bill, H.R. 6392, should be appropriately named the 
``Systemic Risk Creation Act,'' because that is what it does. It 
creates the opportunity for systemic risk to exist, and it puts us back 
where we were before Dodd-Frank such that these various banks and 
lending institutions and other institutions of great amount of finance 
would be in a position to fail without our having the opportunity to 
immediately act upon them, as was the case with AIG. There was no 
system in place to deal with the AIGs of the world.
  Dodd-Frank allows us to do this in a systemic way, a systematic way, 
an orderly way. It allows us to, if we need to, wind down these huge 
institutions--

[[Page H7078]]

wind them down such that they don't create harm to the broader economy.
  I want you to know, Mr. Speaker, for those who think that these are 
all small banks, let me just give you some indication as to how small 
they are. I am looking now at the top five of the 27 in question. The 
top five:
  Number five is $217 billion.
  Number four, $255 billion.
  Number three, $278 billion.
  Number two, $350 billion.
  Number one, $433 billion.
  Only in the Congress of the United States of America would this be 
considered small change.
  We must not allow this deregulation to take place such that we put 
the economic order at risk again. This bill, Dodd-Frank, when it 
passed, allowed us to look at the entire economic order and to 
determine whether or not there were institutions that were a systemic 
risk to the economic order. Prior to Dodd-Frank, they were all siloed. 
Prior to Dodd-Frank, we had long-term capital. Long-term capital was 
the first canary in the coal mine.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield the gentleman 
an additional 30 seconds.
  Mr. AL GREEN of Texas. Long-term capital had its demise in 1998. It 
was a canary in the coal mine. Bear Stearns followed, as well as 
IndyMac, Countrywide, and WaMu. They followed in 2008.
  We didn't have a system that allowed us to recognize these canaries 
in the coal mine and take affirmative action. This is what Dodd-Frank 
does. This is what FSOC does. And it would be a severe mistake to vote 
for legislation to repeal these bills. We are going to live to regret 
this vote. Those who vote to repeal will live to regret it.
  Mr. HENSARLING. Mr. Speaker, I yield myself 10 seconds to say I 
appreciate the passion of my colleagues on the other side of the aisle 
and their concern for taxpayers and systemic risk. So I certainly look 
forward to their cosponsorship of our legislation to get rid of Dodd-
Frank's taxpayer-funded bailout fund.
  Mr. Speaker, I yield 3\1/2\ minutes to the gentleman from Missouri 
(Mr. Luetkemeyer), a real leader on our committee and the author of 
H.R. 6392, the Systemic Risk Designation Improvement Act.
  Mr. LUETKEMEYER. Mr. Speaker, today, the House will consider H.R. 
6392, the Systemic Risk Designation Improvement Act of 2016, 
legislation to address an inefficient regulatory structure by 
accounting for actual risk, rather than asset size alone, in the 
designation of systemically important financial institutions, or SIFIs.
  Under the current regulatory framework for the designation of SIFIs, 
any bank holding company with more than $50 billion in assets is 
subject to enhanced regulatory supervision and special assessments. 
This approach fails to take into account differences in business models 
or risk imposed to the financial system. It has real-world 
implications, too, stunting economic growth and limiting access to 
credit.
  The risk of a traditional bank is not the same as an internationally 
active, complex firm. H.R. 6392 would remove the completely arbitrary 
approach and replace it with analysis of actual risk imposed to the 
financial system.

                              {time}  1330

  More specifically, my legislation would require regulators to examine 
not just size, but also interconnectedness, the extent of readily 
available substitutes, global cross-jurisdictional activity, and 
complexity of each bank holding company. These are metrics that are 
presently being used by the Financial Stability Board and the Office of 
Financial Research to determine what a G-SIFI is, a Global Systemically 
Important Financial Institution.
  This bill number may be new, but the concept is not. With the 
exception of the offset language contained in section 6 of this bill, 
H.R. 6392 is identical to H.R. 1309, which was the legislation I 
introduced last year that attracted broad bipartisan support and 
garnered 135 cosponsors.
  Even Dodd-Frank's author, the former chairman of the Financial 
Services Committee, Barney Frank, said this issue needs to be 
addressed. During a November 20 radio interview, Chairman Frank said: 
``We put in there that banks got the extra supervision if they were $50 
billion in assets. That was a mistake.''
  Chairman Frank further went on to say: ``When it comes to lending and 
job creation, the regional banks are obviously very, very important. I 
hope that if we get some regulatory changes, we give some regulatory 
relaxation to those banks.''
  Chairman Frank testified to that effect--and this is a picture of him 
in front of our committee--and expressed support for our bill back in 
2014. This week we have the opportunity to remedy this oversight.
  This legislation will not impact the authority of the regulatory 
agencies to oversee institutions. It will, however, encourage enhanced 
and more appropriate oversight of institutions that could actually have 
a greater impact on the overall economy, financial system, and, most 
importantly, consumers.
  Mr. Speaker, this is a bill to take a more pragmatic approach to 
financial regulation. Mr. Speaker, it is time to actually manage risk 
and limit threats to our financial system.
  I want to thank my colleagues for their work on this legislation, 
namely, Mr. Murphy, Mr. Stivers, Mr. Scott, Mr. Williams, Ms. Sewell, 
Mr. Hill, and Ms. Sinema, and ask my colleagues for their support 
today. And a special thanks to Chairman Hensarling for his tireless 
support for efforts on this bill.
  Just one moment, if I could, to address a couple of comments that 
were made earlier. We are talking about systemically important 
financial institutions, and the definition of a SIFI is it has got to 
be something that is going to cause the economy to go down. A $50 
billion bank is going to be something that may be important to a local 
economy, but it is not going to be something important to the entire 
economy. This is what we are talking about.
  Big banks have big problems. Medium-sized banks do not affect the 
systemic concern that we should have about the economy, and this is 
where this bill is directed. Somebody who doesn't understand that, I 
think they are missing the point.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. HENSARLING. I yield the gentleman an additional 30 seconds.
  Mr. LUETKEMEYER. So I think even the ranking member made my point a 
while ago when she said 27 banks, a total of $4.6 trillion. We have got 
a half dozen banks over $1 trillion, so we are talking about some small 
banks that are really going to have a small impact with regard to if 
they went down or not.
  That is what the purpose of this legislation, Dodd-Frank, was about: 
to stop the big guys from bringing the whole economy down. The ranking 
member, with all due respect, misses the entire point of what Dodd-
Frank is supposed to be and what the intent of this bill is.
  Ms. MAXINE WATERS of California. Mr. Speaker, while the other side 
fights for the big banks and we over here are fighting for the 
consumers, let me just say that Mr. Frank has not supported H.R. 6392, 
and you need to stop saying that.
  I yield 3 minutes to the gentleman from Washington (Mr. Heck), a 
member of the Financial Services Committee.
  Mr. HECK of Washington. Mr. Speaker, I have a little different take 
on this. I oppose this bill. In fact, I strongly oppose it, but I don't 
exactly oppose the idea at all. Let me explain that.
  The Dodd-Frank legislation was written, as we all know, during a 
period of financial crisis, and legislators and regulators had to act 
quickly. Sometimes, when you have to act quickly, you take shortcuts to 
get the financial system stabilized. But today, the difference is we 
have the luxury of time to go back and replace those shortcuts with 
some more deliberative decisionmaking.
  Now, Dodd-Frank said that every bank holding company over $50 billion 
gets heightened supervision. Well, frankly, back then, for stabilizing 
a financial crisis, that was a great way to move quickly and to get it 
done and to bring about the intended result. But again, for making 
policy over the long term, that doesn't make sense because, in fact, it 
is an arbitrary-size threshold. So it was a shortcut that made sense at 
the time, and I join with you in supporting a reevaluation of that 
particular threshold level. That is the

[[Page H7079]]

idea of this bill, and I support the bill--or support the idea. But, 
again, I don't support this bill at all because, instead of taking the 
luxury of time to make good policy, frankly, it acts like we are still 
back in that crisis, and we are taking another shortcut.
  The bill says FSOC should determine which banks need heightened 
supervision, and that is a great idea. That is what they are there for. 
And then it says FSOC has to complete all of its work on all of the 
banks within 12 months. That is a terrible idea. That is a terrible 
idea.
  The last determination that FSOC took lasted 16 months, and they were 
working on one company at the time--and it took 16 months. And even 
then, the judge said: You took 16 months, and you acted too rashly and 
should have deliberated more. But this bill says only 12 months are 
allowed. And it is not just one company they would be looking at. It 
could be up to 40 companies with over $50 billion in assets.
  So I would say to my friend from Missouri, I think you have a good 
idea. I wish you would have brought a bill reflecting that idea out 
here.
  Let's remember that Bear Stearns was $400 billion; it contributed. 
Washington Mutual, $300 billion; it contributed. All of those banks are 
going to be in one pot that have 12 months to be looked at. We are, in 
fact, gutting Dodd-Frank; and, no, I do not agree with my friend from 
Texas, the chairman, that that is a good idea at all.
  The authors kind of recognized this, which is why they said banks get 
heightened supervision if FSOC says so or if the Financial Stability 
Board in Basel, Switzerland, says so. I don't know why we would cede 
sovereignty. I have been working with the gentleman from Missouri on 
exactly that issue as it relates to insurance companies. Why are we 
ceding our sovereignty to some regulatory entity in another country?
  So I do take a different view of this bill.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Ms. MAXINE WATERS of California. I yield an additional 30 seconds to 
the gentleman.
  Mr. HECK of Washington. I urge my colleagues to support the idea by 
rejecting this bill which will not achieve the intended result because 
it can't work. But the idea can. Go back. Put in a reasonable 
timeframe. Drop that crazy FSB provision, and let the regulators get to 
work looking for the risks that devastated the economy a decade ago so 
we don't have to relive that. If we pass this bill, we very well may.
  The SPEAKER pro tempore (Mr. Jody B. Hice of Georgia). Without 
objection, the gentleman from Missouri (Mr. Luetkemeyer) will control 
the remainder of the time of the gentleman from Texas (Mr. Hensarling).
  There was no objection.
  Mr. LUETKEMEYER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Texas (Mr. Neugebauer), the chair of the Financial Institutions and 
Consumer Credit Subcommittee, who is set to retire shortly, and whose 
expertise and hard work we are going to miss; but his guidance over 
these years has certainly given us a lesson on how to get things done. 
And we certainly hope that he will have a great retirement.
  Mr. NEUGEBAUER. I thank the gentleman for those kind words.
  Mr. Speaker, I rise today in support of H.R. 6392, offered by my good 
friend from Missouri (Mr. Luetkemeyer).
  H.R. 6392, known as the Systemic Risk Designation Improvement Act, is 
bipartisan legislation that ensures that the Federal Government takes a 
thoughtful and comprehensive approach when evaluating the financial 
stability concerns posed by U.S. bank holding companies.
  Under H.R. 6392, the bank holding companies will no longer be 
measured by their size alone when evaluated for the application of 
heightened prudential standards. Instead, the Financial Stability 
Oversight Council will use a metrics-based approach that takes into 
consideration the totality of the bank holding company's operations. 
Using this framework, bank holding companies will be measured on size, 
complexity, their interconnectedness, cross-jurisdictional activity, 
and available substitutes.
  This approach is similar to the framework used by the international 
body known as the Financial Stability Board, which designates global 
systemically important banks. Further, it is the framework already 
being used by the Federal Reserve when it evaluates financial stability 
concerns stemming from bank mergers.
  Mounting evidence coming from regulators and academics have 
highlighted the flaws in using a size-only approach to measuring 
systemic risk. Further, several democratically appointed regulators 
have noted the flaws with Dodd-Frank's threshold of $50 billion in 
assets.
  Put simply, many bank holding companies are being subjected to 
enhanced regulatory requirements for no sound policy reasons. That 
results in restricted lending, decreased services to customers, and 
inefficiencies in the marketplace.
  We must strive to ensure that the government policy is thoughtful and 
properly calibrated. H.R. 6392 is absolutely necessary to ensure that 
we meet those principles.
  I urge my colleagues to vote ``yes'' for H.R. 6392.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield 3 minutes to 
the gentleman from Illinois (Mr. Foster), a member of the Financial 
Services Committee.
  Mr. FOSTER. I thank Ranking Member Waters for yielding.
  Mr. Speaker, I rise in opposition to H.R. 6392, the Systemic Risk 
Designation Improvement Act of 2016. Although many aspects of this bill 
have sound arguments behind them, it contains fatal flaws which should 
preclude our support.
  The financial crisis taught us many things about our markets and 
overturned some fairly fundamental assumptions that were widely held 
prior to it. One of the things we learned was the extent to which 
systemic risk could build up in a regulatory paradigm that was focused 
entirely on entity risk. It was quickly evident that the failure of a 
large institution posed a greater threat than previously believed.
  At the same time the phrase ``too big to fail'' became public 
shorthand for some of these firms, economists and other experts talked 
about another important aspect, too interconnected to fail.
  Asset size is a quick and useful metric for determining whether a 
firm is potentially so large that a failure could have a massive impact 
on systemwide stability, and evaluating the risks that single 
institutions can pose to the system often require a more nuanced 
approach.
  The exposure of counterparties to a failing firm or exposures of 
other institutions to the same risks are systemic risk factors that 
should rightly be considered. Also, as the economy grows, many fixed 
thresholds, such as $50 billion, will shrink in importance. At the very 
least, the importance given to any asset size threshold needs to be 
periodically reconsidered in the scope of an economic indicator like 
GDP. Wherever the line is drawn, it should reflect the macroeconomic 
factors that the bank is nested in.
  Moreover, there is anecdotal evidence that firms will avoid growth--
meaning, cutting back in lending--as they approach any fixed threshold. 
I see this as a market distortion that reflects risks of increasing 
concentration rather than prudent risk management. I see this concern 
with nearly any fixed threshold for being deemed a SIFI.
  However, I think that a nuanced, weighted process that gives 
deference to the expertise of regulatory agencies is appropriate. 
Drawing lines to determine which firms warrant additional scrutiny will 
always be a difficult process. To the extent that the bill we consider 
today looks to other factors that a strong Financial Stability 
Oversight Council with adequate resources and leadership should 
consider, I believe that this is a good start.
  I do think that there are improvements to be made in the designation 
threshold, but I think this bill has two core problems that prevent my 
support.
  First, legislation to change the threshold should give sufficient 
specific direction that it would not move with changes to the political 
leadership of the FSOC. The concentration of an effective veto power in 
the hands of a single political appointee basically aggravates that 
concern tremendously.
  The SPEAKER pro tempore. The time of the gentleman has expired.

[[Page H7080]]

  

  Ms. MAXINE WATERS of California. I yield the gentleman an additional 
30 seconds.
  Mr. FOSTER. Second, thorough analysis of the institutions presently 
categorized as SIFIs but not G-SIBs requires more than a year. The bill 
today rightly looks to characteristics that are important in assessing 
systemic risk, but it does not provide predictability or an adequate 
transition period.
  The most recent financial crisis saw the failure of institutions of a 
variety of sizes, but, for example, the savings and loan crisis was the 
simultaneous failure of many smaller firms.
  I support an approach that looks at many different factors and gives 
discretion to a strong, well-resourced FSOC to designate forms based on 
objective characteristics of the firm so we can prevent another crisis. 
However, I urge my colleagues to vote ``no'' on H.R. 6392 because it 
does not set up the thoughtful framework we need.

                              {time}  1345

  Mr. LUETKEMEYER. Mr. Speaker, may I inquire as to the amount of time 
remaining on both sides, please?
  The SPEAKER pro tempore. The gentleman from Missouri has 15 minutes 
remaining. The gentlewoman from California has 10\3/4\ minutes 
remaining.
  Mr. LUETKEMEYER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Michigan (Mr. Huizenga), chairman of the Monetary Policy and Trade 
Subcommittee. He is obviously one of the greater, deeper thinkers on 
our committee from the standpoint of being able to handle that sort of 
subcommittee. It is certainly an honor to have him with us today.
  Mr. HUIZENGA of Michigan. Mr. Speaker, I appreciate my fellow 
subcommittee chairman who has written a great piece of legislation 
here.
  We all have been talking about Dodd-Frank creating this Financial 
Stability Oversight Council, or FSOC, which was charged with monitoring 
systemic risk in the U.S. financial sector and coordinating regulatory 
responses by its member agencies--a good goal, but an idea gone bad, 
unfortunately.
  FSOC designates these banking companies with over $50 billion in 
assets, they are automatically considered systemically important 
financial institutions, and the act subjects those institutions to 
enhanced regulatory standards.
  Here is the issue, Mr. Speaker: this is not about Wall Street banks. 
This is really affecting and hitting Main Street banks. The SIFI 
designation really is arbitrary, and it subjects these companies with 
those assets. Which, don't get me wrong, $50 billion is a lot of money. 
However, if you look at the totality of our financial institutions, it 
is actually quite small. It suddenly says that they are globally now 
systemically important that, if this particular bank or company went 
out of business, we could take down the whole economy. It is just 
ludicrous.
  The process that FSOC uses to designate these institutions is flawed 
in its current design and lacks the transparency and accountability 
that the American taxpayers deserve and, frankly, expect.
  In fact, the former Financial Services chairman, Barney Frank, under 
which Dodd-Frank is named, even agreed that the $50 billion SIFI 
threshold that he wrote into law and that the Senate wrote into law was 
``arbitrary.'' Maybe 75 was too big and 25 was too small, so they 
settled on 50. There is no basis as to why that number was picked. I 
couldn't agree more with that former chairman.
  This bill, H.R. 6392, the Systemic Risk Designation Improvement Act, 
is a bipartisan bill that passed out of our committee 39-16 with eight 
Democrats joining the majority, and it would require instead that FSOC 
use an indicator-based measurement that has five different operational 
indicators.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. LUETKEMEYER. Mr. Speaker, I yield the gentleman an additional 30 
seconds.
  Mr. HUIZENGA of Michigan. Those five operational indicators are size, 
interconnectedness, complexity, cross-jurisdictional activity, and 
available substitutes. Therefore, what is happening is we are seeing 
fewer products and services available to bank customers because these 
banks are having to pour more additional resources that could go 
towards servicing those customers into a regulation that isn't doing 
anything to protect our economy.
  That ultimately needs to be our goal. Our goal here needs to make 
sure that we restore transparency by allowing regulators to review all 
of the circumstances surrounding that and not have a Washington, D.C.-
driven one-size-fits-all approach.
  Mr. Speaker, I urge my colleagues to support this important bill.
  Ms. MAXINE WATERS of California. Mr. Speaker, it was just said that 
this is affecting Main Street. It is not. All that passion you see on 
the other side is about the big banks, not about community banks.
  Mr. Speaker, I yield 3 minutes to the gentleman from Maryland (Mr. 
Sarbanes), who is a member of the Energy and Commerce Committee and a 
strong advocate for the protection of Wall Street reform.
  Mr. SARBANES. Mr. Speaker, I thank the gentlewoman for yielding.
  Mr. Speaker, I rise today to oppose this legislation, but I also want 
to speak to the millions of Americans of all political stripes who want 
Washington to change, who want to reclaim their voice in their 
democracy, and who long, actually, for the interests of Main Street to 
be put ahead of the interests of Wall Street.
  Unfortunately, Washington hasn't heard you, America. The system is 
still rigged and the swamp is only getting deeper. Special interest 
lobbyists are sharpening their knives in advance of the new Congress, 
and President-elect Trump's administration is ready to carve up the Tax 
Code for their benefit and eliminate oversight of Wall Street.
  In fact, bank stocks are surging now with Wall Street giddy at the 
prospect of tossing out critical rules and regulations designed to 
prevent another financial collapse and taxpayer bailout.
  As one Wall Street analyst put it immediately after the election: 
``Everything is in play.''
  Or maybe we should just use Mr. Hensarling's words: ``You ain't seen 
nothing yet.''
  If you need further proof that special interests and the Wall Street 
elite will be empowered in the new Congress and administration, look no 
further than President-elect Trump's nomination for the Treasury 
Department: Steve Mnuchin--a billionaire hedge fund manager, former 
Goldman Sachs executive and bank CEO. President-elect Trump, a supposed 
champion of the working class, now seeks to appoint a financier who, 
like Trump, personally profited on the financial ruin of hardworking 
Americans.
  What does this have to do with the bill we have before us, you may 
ask?
  Well, a lot. Today, before the new President is even seated and 
Steven Mnuchin is even confirmed, H.R. 6392 will dramatically upend 
sensible oversight of some of the Nation's largest banks, many of which 
were directly implicated in the financial collapse of 2008.
  Taxpayers lose under this legislation, but guess who stands to 
benefit from it?
  Steve Mnuchin. He serves on the board of the bank CIT, receiving a 
salary of $4.5 million. CIT is one of only 27 banks in the country that 
will benefit from this terrible legislation. What is more, under this 
legislation, Mnuchin, if confirmed, will be in charge of overseeing the 
replacement designation process for CIT and the other 26 large regional 
banks rewarded by this legislation.
  Mr. Speaker, this legislation and the nomination of Steve Mnuchin is 
a direct rebuke of President-elect Trump's promise to ``drain the 
swamp.'' The only thing cleaner about the swamp is that the alligators 
will be wearing suits and ties.
  Millions of Americans of all political stripes are hurting. They want 
a more representative democracy. They want public policy designed for 
the public interest, not the special interests. They want a fair shake. 
Let's show them we are still fighting for them. Let's defeat this Wall 
Street giveaway.
  Mr. LUETKEMEYER. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman 
from Wisconsin (Mr. Duffy), who is the chairman of the Oversight and 
Investigations Subcommittee. He is one of our toughest guys on the 
committee. He has got one of the toughest committees to be able to go 
after some of the issues that we are working on.

[[Page H7081]]

  

  Mr. DUFFY. Mr. Speaker, I thank Chairman Luetkemeyer for all his hard 
work on what I think is an excellent bill. It is fascinating to sit in 
this Chamber and listen to the debate and the fear-mongering that takes 
place.
  Before I get into that, let's just take a trip down memory lane. We 
have to look at the financial crisis and what the Democrats chose to 
do, the idea that you can't let any good crisis go to waste. There is a 
financial crisis, so we go to our file cabinets, we open them up, and 
every progressive, liberal idea we take out and put them into Dodd-
Frank--a 2,300-page bill, a bill that was written before the Financial 
Crisis Inquiry Commission even came out with their report on the cause 
of the crisis.
  This is a very, very simple tweak. Right now we have designations for 
systemically risky banks at a set assets threshold of $50 billion. Let 
me tell you what, I have banks in Wisconsin. They are small, regional 
banks--not Wall Street banks--that are getting crushed by these new 
rules and regulations.
  So all we are saying to my friends across the aisle is: You love the 
regulators. You think that the regulators are awesome.
  We are trying to empower the regulators to look at the facts on the 
ground and to look at the interconnectedness and complexity to 
determine risk, not just have a one-size-fits-all mentality. It is not 
one size fits all. We are more complex. Banks are as different as 
people.
  Let's look at the complexity at every bank and make sure they can 
operate within their communities in a way that fits the risk to the 
financial system.
  This gets back to the American people. Why does this matter? Why is 
this not just about finance and complex rules?
  Because if banks can't lend, or if they lend and you are driving up 
the cost of their lending, then that has a real impact on the small 
businesses in my community and the families in my community that can't 
get a loan, or the loans they do get, the costs are going through the 
roof because of all the new compliance costs.
  The bottom line is why do we want to have increased regulatory 
burdens on banks that aren't risky?
  Let's have the regulators focus like a laser on the banks on Wall 
Street who do need the increased regulation, but not the ones that 
don't.
  One size doesn't fit all. Let's work together. Let's modify Dodd-
Frank. This isn't Holy Scripture. It didn't come down from Heaven on 
high. It can be fixed. It is not perfect. Again--we are going to say 
this all day--Barney Frank even thinks the threshold is too low. It can 
be fixed.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. LUETKEMEYER. I yield the gentleman an additional 30 seconds.
  Mr. DUFFY. Mr. Speaker, I look forward to working with my good 
friend, the ranking member. Commonsense reform that looks to your good 
friends, the regulators, to take a sound look at risk profiles, and 
then decide what kind of regulatory regime is necessary for the risk 
that is presented by each of these banks.
  I thank the chairman for his work. I encourage everyone on both sides 
of the aisle to support this commonsense bill that supports small 
businesses and American families to make America great again.
  Ms. MAXINE WATERS of California. Mr. Speaker, the gentleman from 
Wisconsin has the audacity to come to this floor and say that we are 
crushing these pitiful little banks with $50 billion or more. No. You 
are crushing the average person who gets up every morning, who goes to 
work, and who is trying to take care of their families and is getting 
ripped off by these financial institutions.
  Mr. Speaker, I yield 3 minutes to the gentlewoman from Hawaii (Ms. 
Gabbard), who is a member of the Foreign Affairs Committee.
  Ms. GABBARD. Mr. Speaker, I am rising today in strong opposition to 
H.R. 6392. It is a dangerous bill that puts the economic security of 
millions of Americans at risk.
  Let's not forget that just 8 short years ago, the lives of Americans 
all across the country were shaken and devastated by the worst economic 
crisis since the Great Depression. The livelihoods of hardworking 
families were put at risk and millions of Americans lost their homes 
and saw their lifesavings wiped out all because of risky banking 
practices and the overgrown ``too big to fail'' banks. At that time, 
Republicans and Democrats railed against the travesty that these banks 
exacted on the American people.
  This bill threatens to unravel the very protections that were put in 
place to prevent a repeat of this economic crisis. It would gut the 
higher capital requirements on 27 banks that together hold over $4 
trillion in assets--nearly one-quarter of all banking system assets in 
the United States--and water down the independent authority of the 
Federal Reserve to regulate large bank risk.
  Eight years ago, the failure of large regional banks like 
Countrywide, Washington Mutual, and Wachovia--major subprime mortgage 
lenders leading up to the crisis--created shock waves throughout our 
financial system and hurt the American people. This bill would scale 
back the Federal Reserve's ability to regulate these banks, placing 
greater risk and burden on the backs of the American people.
  I urge my colleagues to stand with the people and vote against this 
dangerous legislation.
  Mr. LUETKEMEYER. Mr. Speaker, I yield 3 minutes to the gentleman from 
Kentucky (Mr. Barr), who is one of our bright and shining stars on the 
Financial Services Committee.
  Mr. BARR. Mr. Speaker, I rise in strong support of H.R. 6392, the 
Systemic Risk Designation Improvement Act, and I applaud the 
gentleman's excellent work on this bill.
  The ranking member, my friend, says that this is not about Main 
Street. Let me talk about what this bill is trying to fix, the problem 
we are trying to solve here.
  Dodd-Frank, the legislation that my friends on the other side of the 
aisle are defending, has produced this: small-business lending from 
banks is at the lowest level it has been in 20 years, and more than 75 
percent of corporate treasurers in this country say that Federal 
regulations are stifling access to financial services. As a result, new 
business formation in this country is at a 35-year low.
  This bill is about Main Street because Main Street cannot access 
financial services because of Dodd-Frank. This bill is about fixing an 
arbitrary provision in the Dodd-Frank law that harms consumers and does 
absolutely nothing to stabilize markets.
  Dodd-Frank directs the Financial Stability Oversight Council to 
designate banks as systemically important financial institutions, or 
SIFIs. These designated institutions are subject to surcharges, 
additional regulation, and an implicit taxpayer bailout. That's right, 
their bill is what gives Wall Street a bailout.

                              {time}  1400

  What we are saying is: let's focus our attention on Wall Street, but 
let's get regional banks some regulatory relief so that they can serve 
their customers on Main Street.
  The primary test for systemic importance is an arbitrary threshold of 
$50 billion. Above that line, an institution is designated systemically 
important or too big to fail. Above that line, regardless of the 
institution's risky activities, it is exempt.
  This bill that we are supporting does away with this blunt threshold 
and directs FSOC and its constituent agencies to consider the 
institution's actual activities to determine if it actually is risky. 
If it is not, it deserves relief so that it can serve its customers 
better.
  Size is not the only issue. It is interconnectedness. It is risky 
activities. Many of these regional banks that serve my constituents in 
central and eastern Kentucky, not Wall Street--central and eastern 
Kentucky. Farmers, small business owners, and homeowners in Kentucky 
are being crushed and denied access to capital because of a one-size-
fits-all regulation from Washington.
  Unlike Dodd-Frank's arbitrary approach, this will better promote 
financial stability because it actually targets the enhanced regulation 
to where it belongs and not on Wall Street.
  The bottom line is, we are hearing from regional banks around this 
country, in central Kentucky and other places, that the expense of 
complying with these enhanced regulations and the SIFI surcharge means 
less capital

[[Page H7082]]

for deployment in mortgages, in automobile loans, and in small business 
loans, it means higher credit card rates, and it means fewer customer 
rewards. It impacts these institutions' ability to engage in 
philanthropy and community development activities.
  Treating these regional banks as complex Wall Street firms is simply 
illogical. These are not multinational Wall Street firms. These are 
traditional banks that serve Americans on Main Street.
  Ms. MAXINE WATERS of California. Mr. Speaker, I reserve the balance 
of my time
  Mr. LUETKEMEYER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Pennsylvania (Mr. Rothfus), one of our most thoughtful members on the 
Financial Services Committee.
  Mr. ROTHFUS. Mr. Speaker, I rise today in strong support of H.R. 
6392.
  This bill, the Systemic Risk Designation Improvement Act, offers a 
commonsense approach to the process of designating systemically 
important financial institutions. In doing so, it addresses a problem 
that Republicans and Democrats have complained about for some time.
  Dodd-Frank's $50 billion threshold for identifying SIFIs is a crude 
and arbitrary way to decide which firms pose a risk to the stability of 
the financial system. It is important to remember that SIFI designation 
isn't trivial. When a financial institution is labeled as a SIFI, it 
faces enhanced regulation, supervision, and costs without regard to the 
nature of the bank or the bank's business.
  Accordingly, SIFI designation impacts a firm's lending ability, and, 
therefore, the firm's customers, and their customer's ability to 
thrive.
  If we really care about protecting financial stability and having a 
healthy financial system, we have a responsibility to pursue a fairer, 
more transparent, and more accurate process. The approach set forth 
under H.R. 6392 represents a more rational process for evaluating 
financial institutions, as opposed to the Washington tradition of one-
size-fits-all.
  Under this bill, the Financial Stability Oversight Council will be 
required to look at not only the size of a financial institution but 
also its interconnectedness, complexity, cross-jurisdictional activity, 
and availability of substitutes. Keep in mind that banks designated as 
SIFIs today may still be designated as SIFIs under this new approach.
  This bill's reforms will inject the FSOC's SIFI designation process 
with greater clarity and fairness, and it will result in more 
appropriately targeted regulatory efforts.
  I commend Chairman Luetkemeyer for his work on this important issue, 
and I am proud to be a cosponsor of this bill in its original form.
  I urge my colleagues to support this bill.
  Ms. MAXINE WATERS of California. Madam Speaker, I yield 1 minute to 
the gentleman from Texas (Mr. AL GREEN).
  Mr. AL GREEN of Texas. Madam Speaker, let's take a look at this size 
question because $50 billion was selected for a reason, and the reason 
is this: If you don't have a threshold, we knew at the time, as we know 
now, that you won't get any banks designated because the banks are 
going to sue, and they are going to tie you up in court. Well, maybe 
some will not, but you are going to have a real fight on your hands 
getting them to be designated, and it can take 2 to 4 years to get it 
done.
  Looking at the banks that are covered, only three of the banks 
covered are in the $50-billion range. The top 15 are over $100 billion, 
and the top bank is about a half trillion dollars. Again, only in 
Washington, D.C., would this kind of money--a half trillion dollars for 
one bank--be considered small change.
  We cannot allow the banks to dominate the process. We put the process 
in the hands of the banks when the regulators have to take them on one 
at a time.
  Finally, what is wrong with telling a bank, ``You have to tell us how 
to eliminate you if you become a systemic risk''? That is what Dodd-
Frank does. This bill eliminates the ability of FSOC to determine and 
tell banks that they must give up.
  Mr. LUETKEMEYER. Madam Speaker, I yield 2 minutes to the gentleman 
from Colorado (Mr. Tipton), one of our hardest working members on the 
committee.
  Mr. TIPTON. Madam Speaker, I thank my colleague from Missouri (Mr. 
Luetkemeyer) for offering this important piece of legislation under 
consideration today.
  The bipartisan Systemic Risk Designation Improvement Act replaces an 
arbitrary asset threshold with an indicator-based approach, which will 
better assist the Financial Stability Oversight Council in determining 
the true systemic risk of a financial institution.
  It is a mistake for regulators to continue regulating a $50-billion 
bank in the same way they regulate trillion-dollar global systemically 
important institutions. In fact, this view is shared among regulators 
and legislators. Comptroller Curry, Federal Reserve Board member 
Tarullo, Senator Sherrod Brown, and even former Chairman Barney Frank 
have all made public comments agreeing that the $50-billion SIFI 
threshold is not the best determination for imposing heightened 
prudential standards.
  This bill introduces a better, analysis-driven approach, requiring 
the council to require metrics already established by the Basel 
Committee on Banking Supervision when it identifies Global Systemically 
Important Banks.
  The Systemic Risk Designation Improvement Act will stop the current 
regulatory model of needlessly increasing compliance costs and forcing 
institutions to decrease financial services. By ensuring that the 
SIFI designation process takes into account indicator factors, 
financial institutions that were not the cause of the financial crisis 
will once again be able to fully serve their communities. Not only will 
this legislation provide relief for stable financial institutions, but 
it will also allow regulators to focus their resources, working with 
institutions that pose an actual systemic risk to the financial system.

  It is important to note that this legislation does not strip the FSOC 
of designation powers. It is concerning that some groups oppose a bill 
that encourages the council to use accepted measuring standards to 
justify a SIFI designation.
  Systemic importance should be determined by appropriate criteria 
rather than by an arbitrary line that has no justifiable purpose. To 
advocate for the status quo, and against this legislation, shows a 
fundamental misunderstanding of the financial system and systemic risk.
  I am happy to lend my support to this bill and encourage my 
colleagues to support this commonsense measure. I, again, thank the 
gentleman from Missouri (Mr. Luetkemeyer) for his leadership on this 
measure.
  Ms. MAXINE WATERS of California. Madam Speaker, I continue to reserve 
the balance of my time.
  Mr. LUETKEMEYER. Madam Speaker, may I inquire as to how much time is 
remaining on both sides?
  The SPEAKER pro tempore (Mrs. Black). The gentleman from Missouri has 
2\1/2\ minutes remaining. The gentlewoman from California has 5 minutes 
remaining.
  Mr. LUETKEMEYER. Madam Speaker, I yield 1 minute to the gentlewoman 
from Utah (Mrs. Love). Again, we have a good crop of young folks on our 
committee, and she is one of those bright stars for us.
  Mrs. LOVE. Madam Speaker, we have before us a solution to regulation 
that causes real harm to an important financial institution, especially 
in my State, Zions Bancorporation, which supports the financial needs 
of many families and businesses throughout Utah and the Western States.
  Last year, Zions Bancorporation chairman and CEO, Harris Simmons, 
spoke about increased compliance costs his institution has to face as a 
result of the enhanced prudential standards requirements of the Dodd-
Frank Act. Specifically, Zions has had to divert resources to add 
nearly 500 additional full-time staff to areas such as compliance, 
internal audits, credit administration, and enterprise risk management.
  Mr. Simmons also testified at the House Financial Services' Financial 
Institutions and Consumer Credit Subcommittee that these increased 
compliance costs are offset by reductions in other areas of the 
organization. Many of them are consumer-facing

[[Page H7083]]

functions. In other words, Zions Bank had to move resources away from 
lending to customers and consumer service because of these extra 
regulations. Yet, Zions is one of the smallest SIFIs, with a business 
model centered on very traditional banking activities, primarily 
commercial lending with a particular focus on lending to smaller 
businesses.
  I support H.R. 6392. It allows banks like Zions Bank to get back to 
what they do best.
  Ms. MAXINE WATERS of California. Madam Speaker, I continue to reserve 
the balance of my time.
  Mr. LUETKEMEYER. Madam Speaker, I yield 1 minute to the gentleman 
from Arkansas (Mr. Hill), who brings a wealth of financial services 
background to the committee.
  Mr. HILL. Madam Speaker, I thank the chairman and congratulate him on 
this constructive bill.
  This bill today is not about dangerous agendas, greed, signing 
bonuses, or wholesale exemptions of regulation for 27 big banks--not at 
all. This bill is about using common sense and taking off the autopilot 
that is in Dodd-Frank, which designates our SIFIs on size alone. In 
fact, it includes all the factors that should be considered for 
institutions that might present a systemic risk.
  This is a bipartisan bill that has support on both sides of the 
aisle. Former Chairman Frank's comments have been read into the Record, 
but how about Governor Dan Tarullo: ``Resolution planning and the quite 
elaborate requirements of our supervisory stress testing process do not 
seem to me to be necessary for banks between $50 billion and $100 
billion in assets.''
  Tom Curry, our comptroller of the currency: ``The better approach is 
to use an asset figure as a first screen and give discretion to the 
supervisors based on the risks in the business plan and operations.''
  And Senator Sherrod Brown, certainly a supporter of Dodd-Frank: ``I 
do agree that some banks above $50 billion should not be regulated like 
Wall Street megabanks.''
  I support this bill.
  Ms. MAXINE WATERS of California. Madam Speaker, I yield myself such 
time as I may consume.
  Here we are in the lameduck session of Congress, and we are signaling 
to special interests all the giveaways that are about to come with 
Republicans in control of Washington. And we do this just after the 
President-elect selected a man to head the Treasury Department whose 
bank has been accused of redlining and violating the Fair Housing Act, 
whose bank was responsible for about 40 percent of reverse mortgage 
foreclosures in 2009 to 2014, and whose bank was characterized by a New 
York judge as engaging in harsh, repugnant, shocking, and repulsive 
acts against debtors.
  Donald Trump ran a campaign on anti-Wall Street rhetoric, but 
appointing a former hedge fund manager, Goldman Sachs, executive and 
bank CEO, as Treasury Secretary shows his true colors. Mr. Mnuchin is a 
Wall Street insider with ties to big banks that have a troubling past 
of putting profits ahead of consumers and taxpayers. Mnuchin, during 
his time at OneWest, during his time, foreclosed on homes of 36,000 
families.
  Mr. Mnuchin now sits on the board of CIT, which bought his former 
bank. Mnuchin took a reported $10.9-million payout when the merger was 
completed. CIT's regulatory filings indicate that the bank provides Mr. 
Mnuchin with annual compensation of $4.5 million for each of 2015, 
2016, and 2017, which gives a base salary of $800,000, short-term 
incentives of $1.4 million, and long-term incentives of $2.3 million. 
That is 88 times the household income of the average American family.
  What is worse, CIT is a megabank, and, instead of paying back 
taxpayers, it went bankrupt, like many of Mr. Trump's failed 
businesses.

                              {time}  1415

  Mnuchin is a man who got rich off of the foreclosure crisis and 
taxpayer bailouts again--not unlike Mr. Trump himself--and he will now 
have oversight over significant swaps of our financial regulatory 
system.
  H.R. 6392, in particular, is President-elect Trump's and the 
congressional GOP's first effort to deregulate Wall Street since the 
election.
  This bill stands to benefit just 27 banks in the United States, and 
one of those banks is Mr. Mnuchin's bank, CIT. In fact, CIT just 
recently completed a merger with OneWest, which made Mr. Mnuchin rich. 
That merger also pushed CIT over the $50-billion threshold that would 
make the bank subject to Dodd-Frank rules. Rather than submit to more 
stringent regulation, CIT is trying to grease the skids to get 
favorable treatment in Congress so that its megamerger won't come with 
any strings attached. Specifically, this legislation would eliminate 
CIT from being subjected to more stringent Dodd-Frank rules related to 
capital, liquidity, risk management, living wills, stress testing, and 
other crucial requirements that prevent bailouts.
  What is more, the legislation would take authority to regulate banks 
away from our independent regulators and hand that power over to this 
man, who I am telling you all about, who has a history of proving to 
have not only foreclosed on a lot of innocent homeowners, but who is, 
maybe, I think, under investigation now by HUD.
  Again, this legislation would take the authority to regulate banks 
away from our independent regulators and would hand that power over to 
him. Mr. Mnuchin would now, per H.R. 6392, be in the driver's seat to 
determine which banks get regulated and how. That means he could give 
special favors to his bank while ignoring similarly situated banks, not 
to mention our financial stability.
  My friends on the opposite side of the aisle will tell us: Oh, that 
is a bailout we had to do in order to keep this country from going into 
a depression.
  You force taxpayers to make that bailout--to pay for it. Now here we 
are today with a President-elect who pays no taxes. So why would he be 
worried about whether or not we have a bailout?
  I would say this is one of the worst bills that is going to come 
before us; but just like Mr. Hensarling said: We ain't seen nothing 
yet.
  Madam Speaker, I yield back the balance of my time.
  Mr. LUETKEMEYER. Madam Speaker, I yield myself such time as I may 
consume.
  Just to recap, the Dodd-Frank came into being as a result of the 
crisis. One of the solutions was to be able to fine systemically 
important financial institutions before they brought the economy down. 
Coming up with the SIFI definition was one way to do that. The problem 
was that the SIFI designation was too large and was being impacted in 
too many different and wrongful ways. Even Dodd-Frank's original 
author, Barney Frank, recognized that with his testimony this past week 
as well as in our committee.
  The metrics that we have in the bill are very simple. They are things 
that are used by the Financial Stability Board and by the Office of 
Financial Research when they look at global SIFIs. The CIT and OneWest 
merger that the ranking member keeps talking about are metrics that 
were used by the regulators to determine whether that was something 
they should be doing.
  We are not reinventing the wheel here. What we are doing is taking 
the burden off of the midsized regional banks, which is causing fewer 
products and services to be able to be provided to the customers at an 
increased cost; so I ask for the passage of the bill.
  Madam Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. All time for debate on the bill has expired.


 Amendment No. 1 printed in Part B of House Report 114-839 Offered by 
                              Mr. Davidson

  Mr. DAVIDSON. Madam Speaker, I have an amendment at the desk that 
would ensure the integrity of H.R. 6392, the Systemic Risk Designation 
Improvement Act of 2016.
  The SPEAKER pro tempore. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Add at the end the following:

     SEC. 7. RULE OF CONSTRUCTION.

       Nothing in this Act or the amendments made by this Act may 
     be construed as broadly applying international standards 
     except as specifically provided under paragraphs (2) and (3) 
     of section 113(c) of the Dodd-Frank Wall Street Reform and 
     Consumer Protection Act, as added by section 3.

  The SPEAKER pro tempore. Pursuant to House Resolution 934, the 
gentleman from Ohio (Mr. Davidson) and a

[[Page H7084]]

Member opposed each will control 5 minutes.
  The Chair recognizes the gentleman from Ohio.
  Mr. DAVIDSON. Madam Speaker, I yield myself 2\1/2\ minutes.
  Today's bill spells out the criteria the Financial Stability 
Oversight Council, FSOC, must use in determining institutions of 
systemic risk.
  My amendment will prevent the Federal Reserve and the Treasury from 
blindly implementing new regulations proposed by an international 
entity, whether coming from the Basel Commission or from the unelected 
bureaucrats on the Financial Stability Board. When Congress begins to 
apply international standards, we need to make certain that executive 
agencies don't overreach by simply ratifying every decision that is 
made internationally.
  Recently, the Treasury and the Fed have been found to have made 
determinations that mirror the standards issued by the Financial 
Stability Board but without sufficient review--simply rubberstamping 
them. They have gone along with the decisions that have been made by 
international unelected bureaucrats and, in the process, have harmed 
our regional and community banks and Americans' access to credit. 
Similar concerns have been raised by U.S. insurance companies. That is 
why Mr. Luetkemeyer is also sponsoring legislation to make sure that 
these one-size-fits-all regulations are not used to supersede our 
State-based insurance regulations here in the United States.
  H.R. 6392 will provide the necessary relief and transparency that is 
needed in these systemic risk designations. I am proud to offer this 
amendment to clarify that our Federal agencies cannot use the loophole 
of international recommendations to expand their powers and subject our 
community and local banks to even more burdensome regulations.
  Madam Speaker, I reserve the balance of my time.
  Ms. MAXINE WATERS of California. Madam Speaker, I rise in opposition 
to the gentleman's amendment.
  The SPEAKER pro tempore. The gentlewoman is recognized for 5 minutes.
  Ms. MAXINE WATERS of California. Madam Speaker, this bill outsources 
our domestic regulation by the Federal Reserve and hands it over to an 
international group of regulators known as the Financial Stability 
Board, or the FSB, to determine which banks should be regulated by our 
regulators. It says this international body should decide which banks 
are regulated, not the United States Congress.
  The U.S. is just one member nation among many represented on the FSB, 
and the Republicans have often criticized this board of regulators for 
being ``shadowy'' and not sufficiently deferential to American 
interests.
  Currently, the FSB makes determinations on which global banks are 
systemically significant--not significant to the U.S., but to the 
entire global economy. This legislation imports those determinations 
and sets our domestic regulation on autopilot. If the international 
regulators say you are important, then this bill would grandfather you 
into Dodd-Frank. If not, then you get the big giveaway of deregulation.
  This amendment rightfully says that the U.S. shouldn't be giving away 
our sovereignty over our economy to international regulators, but the 
amendment fails to have the courage of its convictions. Curiously, it 
says that nothing in this bill shall broadly apply international 
regulatory standards to the U.S., with an exception for the part of the 
bill that applies international regulatory standards to the U.S.
  In summary, Democrats who oppose the deregulation of big banks should 
oppose H.R. 6392, and Republicans who oppose outsourcing our regulation 
to foreign bureaucrats should oppose H.R. 6392. This amendment does 
nothing to solve this fundamental issue in the bill, and this 
legislation is still deeply problematic even if the amendment is 
accepted.
  Madam Speaker, I reserve the balance of my time.
  Mr. DAVIDSON. Madam Speaker, I yield the balance of my time to the 
gentleman from Missouri (Mr. Luetkemeyer).
  Mr. LUETKEMEYER. I thank the gentleman from Ohio (Mr. Davidson) for 
his interest and for his authoring this amendment.
  Madam Speaker, the amendment makes clear that H.R. 6392 should not be 
construed to allow international standards to be imposed on U.S. 
institutions. The underlying bill, in two separate places, does rely on 
a similar framework that is utilized by the Basel Commission and that 
is used by the Federal Reserve and the Treasury in an effort to ensure 
that the largest U.S. banks maintain their SIFI designations.
  Beyond these provisions, however, it would be highly inappropriate 
for any international body to use H.R. 6392 to impose any standard on a 
U.S. entity. It is important to make the point, as we advocate today 
for risk-based supervision, that we avoid any sort of blanket approach 
that is so commonly seen out of international regulatory bodies.
  In the case of foreign banks in their doing business in the United 
States, for example, the $50-billion threshold and its interpretation 
by the Federal Reserve results in a huge number of banks being treated 
as SIFIs despite the fact that many of them have under $10 billion in 
assets. As we consider these designations, we need to avoid one-size-
fits-all models and look at factors like comparable home-country 
standards before we move forward on enhanced prudential regulation.
  I hope we can address some of these issues in the next Congress and 
that we can work with international regulators, particularly those in 
the European Union, to avoid the escalation of the ongoing standoff on 
bank capital rules. We should work collaboratively to inject 
commonsense into financial regulation that will protect U.S. taxpayers 
and the financial system without constricting economic growth.
  Mr. DAVIDSON. Madam Speaker, I yield back the balance of my time.
  Ms. MAXINE WATERS of California. Madam Speaker, I yield back the 
balance of my time.
  The SPEAKER pro tempore. Pursuant to the rule, the previous question 
is ordered on the bill and on the amendment offered by the gentleman 
from Ohio (Mr. Davidson).
  The question is on the amendment by the gentleman from Ohio (Mr. 
Davidson).
  The amendment was agreed to.
  The SPEAKER pro tempore. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


                           Motion to Recommit

  Ms. MAXINE WATERS of California. Madam Speaker, I have a motion to 
recommit at the desk.
  The SPEAKER pro tempore. Is the gentlewoman opposed to the bill?
  Ms. MAXINE WATERS of California. I am opposed in its current form.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  Ms. MAXINE WATERS of California. Madam Speaker, I ask unanimous 
consent to dispense with the reading.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from California?
  Mr. LUETKEMEYER. Madam Speaker, I object to the dispensing of the 
reading.
  The SPEAKER pro tempore. Objection is heard.
  The Clerk will report the motion to recommit.
  The Clerk read as follows:

       Ms. Maxine Waters of California moves to recommit the bill 
     H.R. 6392 to the Committee on Financial Services with 
     instructions to report the same back to the House forthwith 
     with the following amendment:
       Page 4, line 17, strike the quotation mark and following 
     semicolon and insert the following:
       ``(4) Certain companies with pending lawsuits or 
     enforcement actions designated by operation of law.--
     Notwithstanding any other provision of this subsection, a 
     bank holding company shall be deemed to have been the subject 
     of a final determination under paragraph (1) if the bank 
     holding company, as of the date of enactment of this 
     subsection--
       ``(A) has total consolidated assets equal to or greater 
     than $50,000,000,000; and
       ``(B) has disclosed in a filing with the Commission that a 
     department or agency of the United States Government has a 
     pending lawsuit or enforcement action against the bank 
     holding company related to the origination, securitization, 
     or sale of residential mortgage-backed securities.''.

  Mr. LUETKEMEYER. Madam Speaker, I reserve a point of order.

[[Page H7085]]

  The SPEAKER pro tempore. A point of order is reserved.
  Pursuant to the rule, the gentlewoman from California is recognized 
for 5 minutes.
  Ms. MAXINE WATERS of California. Madam Speaker, this is the final 
amendment to the bill, which will not kill the bill or send it back to 
committee. If adopted, the bill will immediately proceed to final 
passage, as amended.
  Madam Speaker, make no mistake. This bill is the opening salvo in the 
Trump plan to dismantle Dodd-Frank. The House Republicans have been 
trying for 6 years, ever since we passed Wall Street reform; and on the 
eve of the President-elect's taking office, this is their big chance to 
deregulate 27 of the Nation's largest banks.
  This bill would strip rules around capital, liquidity, stress 
testing, and living wills--key components to guard against catastrophic 
bank failures. These are not community banks. No. These are $50-, $100-
, $200-, and $400-billion banks that engage in exotic products like 
``pick-a-payment,'' which is when you choose how much you want to pay; 
and ``negative amortization'' loans, which is when, incredibly, the 
loan principal goes up, not down, leading up to the financial crisis.

                              {time}  1430

  This bill would strip Fed Chair Janet Yellen of the Fed's independent 
authority and hand it over to Trump's Wall Street Treasury Secretary, a 
man who foreclosed on 36,000 families when he ran this bank, a man who 
has been accused of redlining and fair lending discrimination by civil 
rights and advocacy groups, a man who would be handed the authority to 
deregulate the bank on whose board he now serves, if this bill became 
law. But those conflicts of interest are par for the course in this 
incoming administration.
  President-elect Donald Trump has more conflicts of interest than any 
incoming President in the history of this country. Trump's son-in-law 
and close adviser, Jared Kushner, has hundreds of millions of dollars 
in loans outstanding from domestic and foreign banks and has obtained 
development financing through a controversial U.S. program that sells 
green cards.
  Legal scholars believe Trump's lease with the government over the Old 
Post Office Building where his hotel in Washington, D.C., stands will 
trigger a breach of contract and a conflict of interest the moment he 
is sworn in. And Trump may even violate the Constitution on the day he 
takes office, with former-President Bush's ethics lawyer saying that 
foreign diplomats staying in his hotels would be an unlawful foreign 
gift.
  Madam Speaker, this amendment highlights yet another conflict of 
interest we are facing. President-elect Trump is deeply indebted to 
Deutsche Bank. Over the past two decades, Deutsche Bank has been a 
lender or a co-lender in at least $2.5 billion in loans to Donald Trump 
or his companies.
  Here is a sampling of Trump's indebtedness to Deutsche: The 
businesses within Trump's network currently owe Deutsche Bank nearly 
$360 million in outstanding principal, including $125 million for his 
Florida golf course, up to $69 million for his Chicago high-rise, and a 
$170 million line of credit used to fund the development of his new 
hotel in Washington, DC.
  This legislation, H.R. 6392, deregulates huge megabanks representing 
almost 30 percent of the assets currently subject to stricter rules 
under Dodd-Frank. In the bill, it is possible that the U.S. operations 
of global megabanks--megabanks like Deutsche Bank--would also be 
deregulated. And with Donald Trump's appointments interpreting the law, 
I suspect they will indeed deregulate these global megabanks.
  Why is this important? Well, it is important because Deutsche Bank 
has a potential $14 billion settlement with the Department of Justice 
pending related to toxic mortgages they packaged and sold leading up to 
the financial crisis. They sliced and diced subprime loans and duped 
not only homeowners, but unsuspecting investors. Just like President-
elect Trump, they saw the specter of a foreclosure crisis and financial 
collapse as a business opportunity, not a human tragedy. After Trump's 
election, news headlines said that Deutsche Bank stood to get a 
windfall because the new sheriffs in town would go easy on them.
  This amendment says enough is enough. While the Trump Justice 
Department may give Deutsche Bank a break, the United States Congress 
will not stand idly by and let Trump's conflicts of interest grease the 
skids for powerful interests in Washington.
  I yield back the balance of my time.
  Mr. LUETKEMEYER. Madam Speaker, I withdraw my reservation of a point 
of order.
  The SPEAKER pro tempore. The reservation of a point of order is 
withdrawn.
  Mr. LUETKEMEYER. Madam Speaker, I claim time in opposition.
  The SPEAKER pro tempore. The gentleman from Missouri is recognized 
for 5 minutes.
  Mr. LUETKEMEYER. Madam Speaker, just to highlight some comments here 
with regard to the ranking member's last discussion on this point of 
order, we believe the motion to recommit has absolutely nothing to do 
with financial stability.
  Title 1 of the bill deals with operational standards of bank holding 
companies. This bill we are working with deals directly with how 
regulators deal with banks. A pending lawsuit has nothing to do with 
the financial stability of this bank. This may belong somewhere else in 
the Dodd-Frank bill, but it doesn't belong in here.
  With regards to the underlying bill as well, Madam Speaker, to 
reiterate some of the points that have been discussed already, we have 
a situation where the fix for the crisis of 2008 was Dodd-Frank, as was 
spoken to eloquently by some of my colleagues. Some of the fixes--no 
bill we put together around here is ever perfect. There are always 
problems with it. It always needs to be tweaked down the road.
  This particular issue we are talking about today, systemically 
important designation of institutions, was part of a solution to try 
and be able to identify banks, by definition, that would bring down the 
entire economy so this couldn't ever happen again. If we have a big 
bank go down, it could be of such a size and magnitude and 
connectedness that it would bring down the entire economy. One of the 
unintended consequences of this is that these regulations have rolled 
downhill to small, midsized banks. It was unintended, but they are a 
consequence.
  Barney Frank, the author of the bill, has said on numerous 
occasions--in fact, in our committee, he testified to the fact that 
this is an unintended consequence--it should be fixed. That is what 
this bill does. It fixes that problem.
  These unintended consequences of all these rules and regulations, 
which carry costs with them, are rolling downhill to these midsized 
regional banks; and even at that, they are rolling below that, below 
50. If you are talking $10 billion to $50 billion banks, they will tell 
you that all of the things that the midsized banks above are dealing 
with, they are dealing with that as well. So these regulations that are 
supposed to be for the big banks--a trillion dollars and over or 
whatever--are rolling all the way downhill to the small banks, the 
small community banks.
  Now, they will argue about the fact that $50 billion is an arbitrary 
figure. It is something we need to keep. That is a big bank.
  I am sorry. Madam Speaker, I was a regulator in my former life, and I 
was a banker in a former life. I can tell you that is a big bank, but 
that is not something that is going to bring down the economy unless 
they are interconnected. The metrics in my bill say that if they are 
interconnected--they have got all sorts of other risky actions they are 
engaged in--$50 billion is not going to do it.
  Things that you have to look at are size and all these other criteria 
that we have in here. And these are not criteria pulled out of the air. 
These are criteria that the Federal Stability Board uses, that the 
Office of Financial Research uses when they look at G-SIBs, which are 
global SIBs. So these are analysis tools that are there and have been 
there for a long time.
  Why not give the examiners, the regulators, these tools? I can tell 
you, as a regulator, they already do this.
  A while ago, the point was made it takes the regulator about 12 
months, in my bill, to come up with these designations. The regulators 
already do this.

[[Page H7086]]

They have got the information in hand. There is no reason that they 
can't do this in a 12-month period. I have been there. I have done 
that. It is easy to do. They have the information.
  So what we are doing is taking existing criteria and asking them to 
look at the risk and the business model of this particular entity to 
see if it is something that is big enough and connected enough to go 
down. $50 billion is not someplace where a bank should be that it is 
going to cause the entire economy to collapse, no way. Common sense 
will tell you that.
  So, to close out here very quickly, I think that we have a situation 
where these regulations are costing money to the consumers, to the 
businesses that the banks lend to. One quick factoid is 75 percent of 
the banks before Dodd-Frank had free checking, now only 37 percent.
  Those are just some of the facts, as they roll downhill, that show 
that these regulations are having a negative effect on our economy and 
our local communities. The banks we are talking about are not the 
gigantic interconnected globals, folks. These are large community 
banks, which is basically what they all are, that serve communities and 
mom-and-pop shops. We want to keep them in business. We want to keep 
our communities growing.
  I yield back the balance of my time.
  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 ayes appeared to have it.
  Ms. MAXINE WATERS of California. Madam Speaker, on that I demand the 
yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
order of the House of today, further proceedings on this question will 
be postponed.

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