[Congressional Record Volume 163, Number 60 (Thursday, April 6, 2017)]
[Extensions of Remarks]
[Pages E479-E480]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              FINANCIAL INSTITUTION BANKRUPTCY ACT OF 2017

                                 ______
                                 

                               speech of

                        HON. SHEILA JACKSON LEE

                                of texas

                    in the house of representatives

                        Wednesday, April 5, 2017

  Ms. JACKSON LEE. Mr. Speaker, I rise in support of the bipartisan 
measure, H.R. 1667, the Financial Institution Bankruptcy Act of 2017, 
which was reported favorably out of the Judiciary committee to the 
House floor, on March 29, 2017, on a voice vote.
  As leaders of the Judiciary Committee with oversight of our nation's 
bankruptcy laws, I am glad to see that my colleagues and I were able to 
work across the aisle to answer the question of how to improve the 
existing bankruptcy process for the resolution of failing financial 
institutions.
  Removing potential obstacles to an efficient bankruptcy of a 
financial institution, this legislation enhances the Bankruptcy Code 
and its ability to resolve financial firms for the benefit of stability 
in the U.S. and global economies and does so with minimal financial 
burdens or cost.
  Specifically, H.R. 1667 will allow the expeditious resolution of 
large, complex financial institutions on the verge of insolvency to be 
better facilitated under the Bankruptcy Code by minimizing the 
disruptive impact of the company's collapse on the financial 
marketplace.
  First, this legislation addresses a real need, which is recognized by 
the regulatory agencies, bankruptcy experts, and the private sector, 
that the bankruptcy law must be amended, so that it can expeditiously 
restore trust in the financial marketplace after the collapse of a 
major financial institution.
  Such was the case with the failure of Lehman Brothers in 2008, for 
example, which caused a worldwide freeze on the availability of credit, 
wreaking havoc on Wall Street, as well as, on Main Street.
  The near collapse of our nation's economy that resulted from Lehman's 
failure revealed that current bankruptcy law is, unfortunately, ill-
equipped to deal with complex financial institutions that are in 
economic distress.
  This legislation, accordingly, creates a court-supervised, orderly 
liquidation mechanism that will be guided by the regulators.
  In sum, this process will allow a failing financial institution to 
transfer its assets to a newly-formed bridge company over a single 
weekend, which will promote confidence in the financial marketplace.
  The institution's equity and debt will remain in the bankruptcy case 
to be administered by a trustee under court supervision.
  As a result, valued assets will be maximized for the benefit of 
creditors, and the marketplace will stabilize.
  Additionally, I support the legislation because it appropriately 
recognizes the important role that the Dodd-Frank Act has in the 
regulation of large financial institutions.
  Without a doubt, the Great Recession resulted following the 
regulatory equivalent of the Wild West.
  The Dodd-Frank Act goes a long way toward reinvigorating a regulatory 
system making the financial marketplace more accountable and hopefully 
more resilient.
  The act also institutes long-needed consumer protections that have, 
up until now, not been available.
  For example, Title II of the Dodd-Frank Act establishes a mandatory 
administratively-driven resolution process to wind down large financial 
institutions.
  Title II is a critical enforcement tool for bank regulators to 
facilitate compliance with the act's heightened regulatory requirements 
for large companies.
  Nevertheless, the Dodd-Frank Act clearly recognizes that bankruptcy 
should be a first resort and that the orderly liquidation process 
should be a last resort.
  In fact, Title I of the act explicitly requires these companies to 
write so-called ``living wills'' explaining how they will resolve their 
financial difficulties hypothetically, in the event of a bankruptcy 
scenario.
  This is because bankruptcy law has, for more than 100 years, enabled 
some of the nation's largest companies to regain their financial 
footing.
  H.R. 1667 will ensure that bankruptcy is a truly viable alternative 
to the Dodd-Frank Act's resolution process.
  Mr. Speaker, I am pleased to note that this legislation is the 
product of a very collaborative, bipartisan, and deliberate process, 
which should be the norm, not the exception, when it comes to drafting 
legislation.
  For example, this bill, unlike similar legislation that has come 
through the Senate, does not include any controversial provisions aimed 
at undoing the important protections of the Dodd-Frank Act.
  I should also note, however, that H.R. 1667 does not include any 
provision allowing companies to have access to lenders of last resort.
  Nearly every expert recognizes that such access, even if it is by the 
federal government, is a necessary element to ensure financial 
stability.
  I urge my colleagues to support this measure.

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