[Congressional Record Volume 164, Number 35 (Tuesday, February 27, 2018)]
[House]
[Pages H1308-H1317]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    OPERATIONAL RISK CAPITAL REQUIREMENTS FOR BANKING ORGANIZATIONS

  Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 747, I call 
up the bill (H.R. 4296) to place requirements on operational risk 
capital requirements for banking organizations established by an 
appropriate Federal banking agency, and ask for its immediate 
consideration in the House.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 747, in lieu of 
the amendment in the nature of a substitute recommended by the 
Committee on Financial Services printed in the bill, an amendment in 
the nature of a substitute consisting of the text of Rules Committee 
Print 115-60, modified by the amendment printed in part A of House 
Report 115-582, is adopted, and the bill, as amended, is considered 
read.
  The text of the bill, as amended, is as follows:

                               H.R. 4296

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

     SECTION 1. OPERATIONAL RISK CAPITAL REQUIREMENTS FOR BANKING 
                   ORGANIZATIONS.

       (a) In General.--An appropriate Federal banking agency may 
     not establish an operational risk capital requirement for 
     banking organizations, unless such requirement--
       (1) is based primarily on the risks posed by a banking 
     organization's current activities and businesses;
       (2) is appropriately sensitive to the risks posed by such 
     current activities and businesses;
       (3) is determined under a forward-looking assessment of 
     potential losses that may arise out of a banking 
     organization's current activities, businesses, and exposures, 
     which is not solely based on a banking organization's 
     historical losses; and
       (4) permits adjustments based on qualifying operational 
     risk mitigants.
       (b) Definitions.--For purposes of this section:
       (1) Appropriate federal banking agency.--The term 
     ``appropriate Federal banking agency''--
       (A) has the meaning given such term under section 3 of the 
     Federal Deposit Insurance Act; and
       (B) means the National Credit Union Administration, in the 
     case of an insured credit union.
       (2) Banking organization.--The term ``banking 
     organization'' means--
       (A) an insured depository institution (as defined under 
     section 3 of the Federal Deposit Insurance Act);
       (B) an insured credit union (as defined under section 101 
     of the Federal Credit Union Act);
       (C) a depository institution holding company (as defined 
     under section 3 of the Federal Deposit Insurance Act);
       (D) a company that is treated as a bank holding company for 
     purposes of section 8 of the International Banking Act; and
       (E) a U.S. intermediate holding company established by a 
     foreign banking organization pursuant to section 252.153 of 
     title 12, Code of Federal Regulations.

     SEC. 2. REDUCTION OF SURPLUS FUNDS OF FEDERAL RESERVE BANKS.

       (a) In General.--Section 7(a)(3)(A) of the Federal Reserve 
     Act (12 U.S.C. 289(a)(3)(A)) is amended by striking 
     ``$7,500,000,000'' and inserting ``$7,468,571,428''.
       (b) Effective Date.--Subsection (a) shall take effect on 
     May 1, 2018.

  The SPEAKER pro tempore. The bill, as amended, shall be debatable for 
1 hour equally divided and controlled by the chair and ranking minority 
member of the Committee on Financial Services.
  The gentleman from Texas (Mr. Hensarling) and the gentlewoman from 
California (Ms. Maxine Waters) each will control 30 minutes.
  The Chair recognizes the gentleman from Texas.


                             General Leave

  Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in which to revise and extend their remarks 
and submit extraneous material on the bill under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. HENSARLING. Mr. Speaker, I rise, today, in strong support of H.R. 
4296, an important bill authored by Mr. Luetkemeyer, who is a real 
leader on our committee. He is the chairman of the Subcommittee on 
Financial Institutions and Consumer Credit and has led many bills on 
this floor. This particular one addresses the burden that unnecessary 
operational capital requirements have imposed on our financial 
institutions and then, consequently, on our hardworking families and 
small businesses that are seeking credit.
  The Basel Committee requires U.S. financial institutions to hold 
excessive capital based upon a look-back approach to an organization's 
risk, previous earnings, and other provisions that provide no 
indication of future risk.
  Again, Mr. Speaker, this is about holding operational capital for 
past activities.
  This methodology employed by the international standard setters has 
forced our banks to hold hundreds of billions of dollars in reserve 
rather than putting that money to work in the real economy--in loans 
and investments--for people to buy cars, to launch small-business 
enterprises, or maybe to make a downpayment on that first home.
  Again, Mr. Speaker, let me say it so that all can hear. Hundreds of 
billions of dollars is currently sitting in banks across the country 
not being utilized to fund mortgage loans, car loans, and other day-to-
day financing that American families and individuals demand.
  On top of this is the increased cost of compliance that banks have 
had to shoulder under Dodd-Frank's onslaught of regulation. Banks like 
Coatesville Savings Bank, the only remaining bank in Coatesville, 
Pennsylvania, has told us that, now, 25 percent of their annual budget 
is nothing but compliance cost, Mr. Speaker. This is detrimental to the 
Coatesville, Pennsylvania, community. That is 25 percent. That is a 
huge figure, Mr. Speaker, that cannot be used to fund the American 
Dream in Coatesville, Pennsylvania.
  So, again, Chairman Luetkemeyer brings us a very commonsense reform 
and a very necessary reform.
  Most agree and recognize the importance of our financial institutions 
to hold capital in the event of future crisis or distress. Nobody 
denies that, and this legislation does not remove those requirements. 
But, Mr. Speaker, requiring banking organizations to look back in the 
rearview mirror and hold operational capital against discontinued 
activities or products is just not nonsensical, it is crazy. It makes 
no sense.
  H.R. 4296 simply amends the method of how reserve capital is 
calculated by establishing standards based on an organization's current 
business activities, making the requirements more accurate and tailored 
to a bank's current risk profile. Again, Mr. Speaker, it is just common 
sense. That means banks would still retain sufficient reserves to 
weather an economic storm, but they would be able to put the billions 
of dollars currently sitting on the sidelines to work to help make the 
economy grow, to make it healthier.
  In short, this method-based approach proposed by H.R. 4296 properly 
calibrates operational capital while also ensuring strong, healthy 
financial institutions and, thus, a stronger economy for our 
constituents.
  Again, to be very clear, Mr. Speaker, H.R. 4296, does not prevent 
Federal financial regulators from instituting operational risk capital 
requirements. It does not eliminate the authority of a regulator to 
assess operational risk, nor does it prevent regulators from requiring 
that capital be held against riskier activities or businesses. The bill 
simply puts forth a thoughtful framework that sets parameters, while 
allowing regulators the flexibility needed to ensure that capital 
standards are appropriately tailored.
  A healthy financial system, Mr. Speaker, will enhance individuals' 
financial freedom and will lead to a healthier and better regulatory 
system.
  H.R. 4296 has garnered strong, bipartisan support in our committee, 
passing by a vote of 43-17, again, because it is practical and common 
sense.
  I again want to thank the gentleman from Missouri (Mr. Luetkemeyer), 
who chairs our Financial Institutions and Consumer Credit Subcommittee, 
for his leadership on this bill. I urge all of

[[Page H1309]]

my colleagues to join me in supporting this important bipartisan 
measure, and I reserve the balance of my time.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such 
time as I may consume.
  Mr. Speaker, I rise in strong opposition to H.R. 4296. This bill is 
simply another rollback of rules put in place after the financial 
crisis. It would undermine the stability of our country's largest 
financial banks by restricting the way regulators set capital 
requirements for these institutions.
  Before I get into why this bill is problematic, let me take a moment 
to clarify what capital is and what it is not.
  Some have said that capital is money that is held on the side or in 
reserve and cannot be used to lend to borrowers. This couldn't be 
further from the truth. Capital is not a reserve. Capital refers to the 
terms of the financing a bank receives.
  In the most simplistic example, a bank receives funds from customers 
making deposits, loans it receives from other institutions, and stock 
it has issued to investors. The bank uses all of these sources of 
funding to make mortgages and other loans to customers. However, there 
are important differences.
  Bank debt has terms like regular interest payments that, if it stops 
paying, the bank fails.

                              {time}  1600

  However, a bank can stop paying dividends on a stock without it 
failing. Banks funded with lots of debt are described as being higher 
leveraged and risky because only a small drop in the value of their 
mortgages and other assets can cause them to default.
  Funding a bank through higher levels of capital makes the bank 
stronger, because even if the loans it has made lose value, the bank 
can avoid default by temporarily halting payments to their investors or 
lowering the value of the stock.
  H.R. 4296 would impact something called operational risk capital, 
which is the capital used to cover the possibility of losses to the 
largest banks caused from their operational failures, such as rogue 
traders, fraudulent sales practices, and cyber breaches.
  H.R. 4296 would diminish this type of capital, which only about 10 
megabanks are required to maintain under an enhanced framework, by 
restricting the information that regulators can use to determine the 
appropriate balance of safe funding, like bank stock versus debt, that 
megabanks should have to address potential operational losses that may 
occur.
  The bill would direct regulators to primarily consider a megabank's 
current activities and not their past behavior when setting the capital 
level, thereby enabling the bank to take on more debt.
  According to Americans for Financial Reform, a nonpartisan coalition 
of more than 200 civil rights, consumer, labor, business, investor, 
faith-based, and civic and community groups:
  ``While current activities are obviously central to operational risk, 
and are already treated as such, the recent loss experience of banks is 
the best concrete evidence regulators usually have as to the magnitude 
of current and future risks. Recent past activities are also vital to 
understanding the future exposures of the bank, including potential 
legal exposures.''
  Thus, this change to how regulators determine the appropriate amount 
megabanks should maintain for operational risk is imprudent. A 
megabank's past actions are often the best indicators of future 
potential risks that it may experience.
  Well, memories seem to quickly fade in Congress about the problems 
that led to the last financial crisis, so let me list some of the 
examples of past megabanks' operational failures by J.P. Morgan's 
``London Whale'' trades and Wells Fargo's long list of violations that 
have ripped off millions of consumers, including those harmed by their 
fraudulent accounts scandal.
  Given these examples of past misconduct, the megabanks have 
collectively paid more than $160 billion in fines since 2010. It is 
absurd to suggest that their past behavior shouldn't be taken into 
account when determining how much capital they should hold.
  Even the Basel Committee, which several of President Trump's 
appointees now serve on, agreed in December, when they finalized Basel 
III reforms from where the operational risk capital originates, 
writing:
  ``Banks which have experienced greater operational risk losses 
historically are assumed to be more likely to experience operational 
risk losses in the future.''
  So it makes no sense to have a forward-looking assessment that 
deemphasizes a megabank's past failures in setting these capital 
requirements. It is almost as if this bill is saying: ``Don't pay any 
attention to that. No matter how bad they have been, don't look at 
their past performance. We don't want you to look at that, because we 
know if you do, you will make a different decision about capital 
requirements.''
  The nonpartisan Congressional Budget Office estimated that the bill's 
changes would cost the Federal Government $22 million. This calculation 
was based on the fact that the capital change would not only affect the 
bank's probability of failure, but also the magnitude of future losses 
to our entire financial stability, which, in turn, affects the overall 
U.S. economy.
  This is not a bill to help community banks. It has nothing to do with 
community banks. Let me repeat that. This is not a bill to help 
community banks, so what we wish we would not hear is someone coming up 
talking about how it is going to hurt community banks. That is often 
used as an excuse. When we are trying to rein in these megabanks, they 
always lop in the community banks with it. This has nothing to do with 
community banks. This is a bill for the 10 largest banks in this 
country.
  So the megabanks on Wall Street are hoping Congress will let them 
take on riskier debt by directing the regulators to downplay, if not 
outright ignore, their recent and extensive operational failures.
  Mr. Jamie Dimon, the CEO and chairman of JPMorgan Chase, wrote in his 
2016 annual letter to shareholders that:
  ``Operational risk capital should be significantly modified, if not 
eliminated.''
  Let's think about it like this: most adult consumers in this country 
have a credit score. Banks use those credit scores to determine whether 
or not to lend to a consumer and, if so, under what terms.
  These credit scores are based on a consumer's what?
  A consumer's past payment history, because this information is 
considered one of the best indicators of a person's likelihood to 
default on future credit obligations.
  Now, we all know that credit scores are problematic, but no one, 
including me, is proposing to get rid of them, because we can all agree 
that past payment information is a good indicator of how someone will 
handle credit in the future, but this bill takes that principle and 
throws it out the window when it comes to the 10 largest banks in this 
country.
  Keep in mind, these same banks will continue to use a consumer's 
credit score for underwriting and rating of mortgages and other 
consumer loans, but the megabanks themselves are asking this Congress 
not to judge them on their past behavior, as they judge consumers, and 
to let them have a clean slate moving forward. If that isn't a double 
standard, Mr. Speaker, I am not sure what is.
  Mr. Speaker, bank profits reached an all-time record high in 2016. 
Compensation for Wall Street CEOs has shot back up to levels last seen 
in 2006, and business lending is up 75 percent since 2010. All this 
happened while U.S. banks added more than $700 billion in capital to 
absorb potential losses. There is a simple reason for this: healthy 
banks lend.

  U.S. banks also lent significantly more than their European 
counterparts, because our banks boosted their capital levels, while the 
European banks did not.
  So despite Republicans' ``Chicken Little'' arguments about the dire 
consequences of the Dodd-Frank Act and related regulatory reforms, the 
data speaks for itself. Banks are making more money than ever and 
lending more than ever, but apparently that is not enough.
  So I am here again today appealing for Congress to continue to uphold 
the commonsense safeguards for consumers, the broader economy, and the

[[Page H1310]]

megabanks. I reject this Wall Street giveaway.
  Mr. Speaker, I urge my colleagues to oppose this harmful legislation, 
and I reserve the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I yield 5 minutes to the gentleman from 
Missouri (Mr. Luetkemeyer), the chairman of the Subcommittee on 
Financial Institutions and Consumer Credit, and the bill's sponsor.
  Mr. LUETKEMEYER. Mr. Speaker, I thank the chairman for his great 
leadership and for helping us with this legislation.
  Mr. Speaker, I rise today in support of H.R. 4296, legislation that 
would set reasonable parameters for Federal financial regulators when 
establishing operational risk capital requirements so that banks can 
best leverage their capital to grow their local economies.
  In the wake of the financial crisis, operational risk capital 
requirements were first agreed to at the Basel Committee. That is a 
foreign group of folks who get together. We have accepted some of their 
advice, unfortunately, and then it was implemented in the United States 
by the FDIC, the OCC, and the Federal Reserve.
  Like many concepts fashioned at the Basel Committee, the original 
intent may have seemed to be a good idea, but the implementation has 
brought about confusion and unintended consequences.
  The committee, realizing it didn't get it right, has revised its 
recommended operational risk standards on more than one occasion in the 
last few years. The first was in the fall of 2014, when the committee 
found that its original standards were under-calibrated. The second 
came in 2016, when the Basel Committee suggested a requirement that 
would force banks to look back and hold capital against discounted 
activities and products. This is not an appropriate way to determine 
capital requirements.
  So what does this mean?
  It means that today a bank that exited a particular line of business 
must still hold the same amount of capital as another bank that is 
still engaged in that business. It also means that a bank that spends 
money to improve risk management will be saddled with the same capital 
standards as a bank that has done nothing to improve its risk 
management.
  My legislation would instill confidence by instituting clear 
guardrails for operational risk capital requirements. This is 
particularly important considering that the European regulators have 
moved the goalposts on U.S. regulators and financial institutions 
several times.
  H.R. 4296 will also ensure that the imposition of forward-looking 
capital requirements focus on the bank's current activities and 
businesses.
  Equally important, this bill would incentivize institutions to 
mitigate operational risk, creating safer banks and a safer financial 
system.
  To be clear, this legislation does not prevent Federal financial 
regulators from instituting operational risk capital requirements. It 
does not eliminate the authority of a regulator to assess operational 
risk, nor does it prevent regulators from requiring that capital be 
held against riskier activities or businesses.
  In other words, it would allow the regulators to continue their 
business of regulating, but putting some common sense in the regulation 
and allowing the flexibility to be able to use a forward-looking way of 
assessing risk rather than being forced to do a look-back-type of risk 
analysis.
  This bill puts forth a thoughtful framework that sets parameters 
while allowing regulators the flexibility needed to ensure that capital 
standards are appropriately tailored.
  Given my background as both a banker and a regulator, I am often one 
of the loudest voices in favor of strong capital standards. At the same 
time, those standards need to make sense, Mr. Speaker. They need to 
reflect the actual risk posed by the institution to the financial 
system.
  These standards have a tremendous impact on a bank's capital levels, 
and it is important that the regulators get them right so that they 
don't hamstring the bank's ability to meet the credit needs of its 
local economy and community.
  I hope my colleagues will join me in voting in favor of this 
commonsense bipartisan legislation.
  Mr. Speaker, I again thank the chairman for his support.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield as much time as 
she may consume to the gentlewoman from Ohio (Mrs. Beatty), a member of 
the Financial Services Committee.
  Mrs. BEATTY. Mr. Speaker, I thank our ranking member, Congresswoman 
Maxine Waters, for yielding me time and also for her steadfast 
leadership in opposing the Financial CHOICE Act and many of the 
provisions included in the bill, including the one that we are 
considering on the floor today.
  Mr. Speaker, this bill flies in the face of the old maxim: Those who 
do not remember the past are condemned to repeat it.
  This bill would effectively blindfold our regulators when calculating 
operational risk capital at our largest institutions--it is worth 
repeating again: not our community banks, but our largest 
financial institutions--by precluding them from looking at an 
institution's historic losses as an indicator of possible future 
losses.

  Now, earlier, the ranking member injected an example of asking about 
our credit scores. I think it is worth elaborating on this, Mr. 
Speaker. Imagine if I go to a bank for a mortgage loan and they ask me 
for my credit score, and I simply told them they couldn't look at my 
past financial behavior in order to decide whether or not they are 
going to give me the loan.
  So when you talk about good or commonsense regulation, we all know 
the answer to that question, Mr. Speaker.
  Well, this bill would effectively do just that to our regulators. 
Instead of a credit score, which determines creditworthiness, 
operational risk determines the risk of loss resulting from inadequate 
or failed internal processes, people, and systems.
  I would tell our regulators, when determining the appropriate level 
of capital a financial institution needs to hold against operational 
risk, you cannot look at an institution's past losses, especially if 
they got out of that business.
  Mr. Speaker, I think this is common sense. I think whether you are a 
banker or a regulator, you clearly understand that we need to make sure 
that we don't blindfold our regulators.
  So I oppose this bill, which would reduce capital in our country's 
largest financial institutions and blindfold our regulators' ability to 
safeguard the stability of our economy. I urge all of my colleagues to 
vote ``no.''

                              {time}  1615

  Mr. HENSARLING. Mr. Speaker, I yield myself 30 seconds.
  As I listen to my colleague from Ohio, she uses the complete wrong 
analogies. What happens is we don't pay our home insurance premiums on 
the home we sold; we pay it on the home we own.
  If you lived in a swamp and then you moved to a mountaintop in 
Colorado, you pay different insurance premiums; and if you cease to be 
a skydiver and you become an accountant, maybe you pay different life 
insurance premiums. This has to do with your risk profile today, not 
yesterday.
  Mr. Speaker, I yield 3 minutes to the gentleman from Ohio (Mr. 
Stivers), a member of the Financial Services Committee.
  Mr. STIVERS. Mr. Speaker, I rise in support of H.R. 4296, sponsored 
by my colleague Blaine Luetkemeyer. This bipartisan bill makes 
important corrections in the bank capital requirements for operational 
risk. Under the legislation, regulators would continue to be able to 
consider the bank's operational risk, but would do so in a forward-
looking manner.
  Currently, financial institutions are required to hold risk-based 
capital, even for discontinued activities and products. Accounting and 
the capital markets often use the concept of pro forma financials, 
which means you consider the ongoing operations, or the way that it 
would look if it looks like it is today, going forward. This bill would 
institute that same approach for regulators to use pro forma 
operational risk, so they wouldn't have to continue to charge a capital 
charge on operations that have been discontinued.
  I think the chairman made a great comment about you don't buy home 
insurance on a home you have already sold. My colleague, Mr. 
Luetkemeyer,

[[Page H1311]]

during the markup of this bill, talked about how the Basel Committee 
has revised this specific capital requirement several times, but it is 
still a work in progress. This legislation is just a commonsense change 
to make sure that banks are not charged capital charges against things 
that they aren't doing anymore.
  This approach will free up capital that is needlessly on the 
sidelines and put it back in reach of America's job creators. I urge my 
colleagues to vote ``yes'' on H.R. 4296.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield 2 minutes to 
the gentlewoman from Ohio (Mrs. Beatty). She has raised a question 
about the analogies that the chairman made, and those analogies seem to 
escape ordinary logic.
  Mrs. BEATTY. Mr. Speaker, I thank the ranking member for yielding me 
this time.
  Maybe I should try to right that wrong analogy that our chairman 
thought; but maybe if I take his analogy that it is not based on the 
house I sold but it is based on the house I am living in, well, what is 
the difference?
  If I went to the bank and wanted to put my house up for collateral 
but I hadn't paid the payment on it in 4 months and it was getting 
ready to be foreclosed on, I think they would want to know that. And 
that would be maybe a better analogy on it, because what we are trying 
to say to the people who are out there watching and listening to this: 
You cannot let our larger banks put us at risk, what we know also 
happened in 2008.
  So that was the point I was making. So let's say the analogies don't 
work so we don't have to go back and forth. Let me just say that I am 
voting ``no'' on this because I don't want to blindfold or tie the 
hands of the regulators' being able to do their jobs.
  Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from 
Illinois (Mr. Hultgren), the vice chairman of the Financial Services 
Subcommittee on Capital Markets.
  Mr. HULTGREN. Mr. Speaker, I also want to thank Chairman Hensarling 
for all of his work moving this important regulatory reform through.
  I speak today in support of H.R. 4296, to place requirements on 
operational risk capital requirements for banking organizations 
established by an appropriate Federal banking agency. This bill is one 
of many that are being reported by the Financial Services Committee 
with bipartisan support.
  I want to commend Congressman Luetkemeyer and Congressman Meeks for 
working together to get a very strong vote from the Financial Services 
Committee. I hope that is something we can accomplish today on the 
House floor.
  This legislation acknowledges that we can make improvements to the 
regulatory framework that has been implemented or is still pending in 
response to the financial crisis. My constituents and I are very 
pleased to see the economic growth over the last year, but that does 
not mean we shouldn't take additional steps to ensure that we have an 
efficient regulatory system. For example, the Fed is likely going to 
continue tightening rates, and I am not sure Congress will always be 
able to provide the progrowth fiscal policy that we have seen as of 
late.
  One of our other tools for affecting the performance of the economy 
is a progrowth but sensible regime that permits for investment, job 
creation, and financial security. H.R. 4296 will ensure our banking 
regulators institute operational risk capital standards that make sense 
for the U.S. financial system.
  This legislation ensures that operational risk-based capital 
requirements are reflective of the banking organization's current 
activities and businesses. This seems logical, but the current approach 
is dependent on historical performance and does not provide for 
adjustments based on changes made by a banking organization.
  So, for example, a banking organization might suffer from a cyber 
attack that results in losses for the organization. In fact, cyber 
attacks and data breaches are considered to be one of the largest 
categories of operational risk. In response, this banking organization 
could choose to overhaul its ability to detect and respond to such 
operational risk incidents.
  Shouldn't our capital framework reflect that work, or should the 
banking organization continue to suffer from a punitive framework that 
disincentivizes proactively addressing operational risk?
  I, for one, am supportive of policies that will encourage investment 
by banking organizations to address reputational risk, such as those 
that might pose a risk for a data breach. I would encourage all of my 
colleagues to vote in support of this bipartisan legislation. I would 
encourage our financial sector to proactively address operational 
risks, and it will also free up capital to permit for economic growth.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield such time as 
she may consume to the gentlewoman from Hawaii (Ms. Gabbard), a member 
of the Congressional Progressive Caucus.
  Ms. GABBARD. Mr. Speaker, I thank Ranking Member Waters for her 
leadership in opposing this bill and standing for the protection of 
everyday Americans.
  We can't forget that it was only 10 years ago that millions of 
hardworking families watched their life savings entirely wiped out. 
They lost their homes. They couldn't afford to send their kids to 
college. And all of this heartache, this pain, this suffering that they 
went through was the direct result of risky predatory lending practices 
and too-big-to-fail banks that did not have sufficient capital in place 
to support and absorb their financial losses.
  It was in the aftermath of this financial disaster in 2008 that 
Congress passed protections to prevent this from happening again, but 
here we are today where these big banks now believe that we should 
simply forget the past mistakes that they made and, instead, only 
evaluate their current activities to determine certain capital 
requirements. I guarantee you those families that have suffered have 
not simply forgotten about what they went through and what they are 
still struggling to overcome and recover from.
  By ignoring critical indicators of past activities, this bill would 
allow big banks, like Wells Fargo, for example, who defrauded the 
American people just in the last several months by opening millions of 
fake accounts, to get away with a slap on the wrist. And the American 
people are set up to take the fall for their actions.
  Now, supporters of this bill claim that current capital requirements 
stifle lending and hurt our banks and the economy, but the facts say 
otherwise. In 2016, bank profits reached an all-time high, and today 
business lending is up 75 percent since 2010. Our country's banks added 
more than $700 billion in capital to absorb potential losses and 
protect Americans and our economy from financial disaster.
  Higher capital requirements don't restrict lending. They simply 
ensure that big banks that are even bigger today than they were in 2008 
can absorb their losses without depending on taxpayers for a bailout.
  The American people deserve a financial system that works for them 
and their families, not one that bets against them to boost Wall Street 
profits. We need to pass legislation that increases these capital 
requirements of banks with assets greater than $50 billion and continue 
to enact and strengthen reforms that will protect our economy and 
American families from another massive collapse. That is why I am 
strongly urging our colleagues to reject this dangerous bill and, 
instead, work together towards efforts to build a financial system that 
serves the American people, not special interests or Wall Street banks.
  Mr. HENSARLING. Mr. Speaker, I yield myself 30 seconds.
  I point out to my friends on the other side of the aisle, there are 
over 20 different capital levels that are already applied to our 
banking organizations, including the Total Loss-Absorbing Capital, the 
TLAC.
  I would also point out, if my friends are so concerned about capital 
levels, maybe they should have supported the Financial CHOICE Act, 
which is a tradeoff between greater levels of capital and Washington 
micromanagement of our financial institutions.
  Last but not least, Chairman Powell of the Federal Reserve appeared 
before our committee just this morning to say safety and soundness 
considerations

[[Page H1312]]

allow the Fed to, for all intents and purposes, impose any capital 
level they want to on our banking institutions, thus undercutting all 
the arguments we have heard from the other side of the aisle.
  Mr. Speaker, I yield 3 minutes to the gentleman from North Carolina 
(Mr. Pittenger), the vice chairman of the Financial Services 
Subcommittee on Terrorism and Illicit Finance.
  Mr. PITTENGER. Mr. Speaker, I thank my good friend and chairman of 
the Financial Institutions and Consumer Credit Subcommittee, Mr. 
Luetkemeyer, for his active work on this important legislation.
  In the aftermath of the financial crisis, the Basel Committee 
expanded regulations on operational risk requirements imposed on 
financial institutions. Unfortunately, like many of the implemented 
regulations, unintended consequences were brought about. The complexity 
and nature of the current operational risk capital requirements have 
greatly diminished the availability of credit for consumers, resulting 
in increased costs and prices for families and small businesses.
  To address these concerns, H.R. 4296 limits the burden of operational 
risk capital requirements to a bank's current activities and businesses 
and permits adjustments to lessen operational risk. This will ensure 
that banks are holding increased capital more efficiently and will 
expand the credit market to better meet the needs of hardworking 
Americans.
  Let me be clear: This bill does not eliminate operational risk 
capital requirements but, prudently, ensures that requirements are 
forward-looking and appropriately tailored to a bank's current 
financial risk profile. As a key provision of the CHOICE Act, which 
passed the House in June, I want to thank Mr. Luetkemeyer for his 
persistence and continual leadership on this important issue.
  I urge all of my colleagues to please join us in supporting this 
commonsense, bipartisan bill.

  Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such 
time as I may consume.
  In addition to the concerns I have raised about this bill, I also 
want to mention a change to H.R. 4296 made in the Rules Committee just 
last night.
  Because H.R. 4296 makes the 10 largest banks more likely to fail, the 
nonpartisan Congressional Budget Office determined that there was a 
higher likelihood that taxpayer funds would be used to wind down a 
megabank. To offset these costs, Republicans have taken funds from the 
Federal Reserve's surplus account.
  So what is the Fed's capital surplus account? Effectively, it is a 
rainy-day fund intended to ensure adequate capital is available to 
absorb possible losses. Several stakeholders have raised concerns that, 
by reducing the Fed's surplus account, Congress could negatively affect 
the Federal Reserve's independence in monetary policy decisionmaking by 
rendering it dependent on Treasury for recapitalization in the event 
that total Reserve bank capital is depleted.
  Put simply, this bill not only makes the 10 largest banks more likely 
to fail, but it also makes it more likely that the Federal Reserve will 
be unable to address problems in the financial system going forward.
  I would like to also mention that, in a letter opposing this bill, 
the Center for American Progress highlighted, again, several budgetary 
considerations we should keep in mind as we debate this bill. And, of 
course, I have either mentioned or alluded to it, but it is important 
that we understand that the Center for American Progress is very 
concerned, and the CBO also projects, that H.R. 4296 will increase the 
deficit due to an increase in expected losses to the Federal Government 
stemming from an increase in the likelihood of another financial 
crisis.

                              {time}  1630

  The bill would pay for these costs by lowering the Federal Reserve 
System's surplus funds, once again treating the Fed like a piggy bank 
and shifting privately generated losses to the public.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from 
New York (Mr. Zeldin), a very hardworking member of the Financial 
Services Committee.
  Mr. ZELDIN. Mr. Speaker, I thank Chairman Hensarling for all of his 
leadership and for recognizing me to be able to rise in strong support 
of this bipartisan legislation introduced by my colleagues on the 
Financial Services Committee, Congressman Blaine Luetkemeyer and 
Congressman  Gregory Meeks.
  Like so many regulations imposed by the 2010 Dodd-Frank law, the 
current set of operational risk capital requirements imposed on 
America's financial institutions place a one-size-fits-all solution on 
banks, regardless of their capitalization, their various lines of 
business, and the customers they serve.
  The current standard under Dodd-Frank requires banks to look back and 
hold operational risk capital against discontinued business activities 
or products. In plain English, this means banks are being forced to 
hold capital to hedge against a fictitious risk of a loan or a product 
discontinued years ago.
  This is not an effective way to determine capital requirements, nor 
is it in line with the real risk these standards are meant to protect 
consumers from.
  This is hurting consumers by making credit less available in the 
marketplace, and this especially hurts the small- and medium-size 
hometown banks that our communities rely on.
  To my constituents on Long Island, and to hardworking American 
families across our country, the consequences of these misguided 
regulations are more costly loans and less available mortgages. These 
are the financial products that help small-business owners expand and 
hire or help families buy a new home.
  H.R. 4296 reforms operational risk requirements so they can be 
focused on a bank's current activities and line of business. This 
legislation keeps sound standards in place so that banks must avoid 
risky behavior while also freeing up needed capital so that it can be 
lent to consumers, not be needlessly held up in a vault to meet a 
misguided government mandate.
  By ensuring that capital standards are transparent, fair, and based 
on real-life economic conditions, this bipartisan solution removes a 
troubling roadblock to capital that would otherwise be allocated to 
consumers, homeowners, and businesses.
  Mr. Speaker, I want to again applaud the bipartisan teamwork of my 
colleagues Blaine Luetkemeyer and  Gregory Meeks. I also want to thank 
Chairman Hensarling for all of his leadership on this important issue 
and so many others, and I urge all of my colleagues to vote ``yes'' on 
this important bipartisan bill.
  Ms. MAXINE WATERS of California. Mr. Speaker, early in my statement, 
I warned that there would be someone who would come on the floor and 
claim that it was going to hurt community banks, small town banks; and 
this bill has nothing to do with community banks or small town banks.
  This is about megabanks. This is about SIFIs. This is about the banks 
that can cause harm in the whole system. This is about those banks that 
we must be concerned about because of the displacement that they can 
cause, not only in this country, but internationally.
  Mr. Speaker, I just remind you again this has nothing to do with 
community banks. This has nothing to do with small town banks. This is 
just the big banks that are significantly important banks.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from 
Ohio (Mr. Davidson), a very thoughtful member of the Financial Services 
Committee.
  Mr. DAVIDSON. Mr. Speaker, I rise today to offer my support for H.R. 
4296 and for the bipartisan work of our committee, the work our 
chairman has helped lead; and I am encouraged that this bill will 
establish clear guardrails for operational risk capital requirements 
and improve U.S. capital framework as a whole.
  This legislation is another example of ensuring regulators work in 
the best interest of the U.S. economy rather than abiding by 
international standards that hold American businesses back rather than 
move them forward.
  In fact, the very premise of this legislation reminds me of a song. I 
remember when Bill Clinton was running, he

[[Page H1313]]

had a song about: ``Don't stop thinking about tomorrow. Yesterday is 
gone; yesterday is gone.'' It is all about the future.
  Well, this piece of legislation that is in place today, established 
by the Basel Committee in 2006, is thinking about tomorrow, is thinking 
about yesterday. What happened in the past is constraining what could 
happen in the future.
  So banks are reserving against past losses in an era that holds them 
from being able to adopt the business plans that maybe even under new 
leadership, new board members, and a whole new set of governance 
requirements that will get the company moving forward at a better 
growth rate. This is better for not just the company, not just the 
executives or the board members, but the consumers that would be served 
by this market.
  Take, for instance, historic losses being reserved against. That 
capital is sitting there not actively employed in the market. Even the 
Basel Committee saw how ridiculous this rule is; so they updated their 
guidance, in 2016, to include historical loss experience as a relevant 
indicator instead of as the sole factor.
  It is time that we move forward in the best interests of our country 
and make rules that help American businesses instead of hold them back.
  Mr. Speaker, I urge my colleagues to support this vital legislation.
  Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentlewoman 
from New York (Ms. Tenney), a hardworking member of the Financial 
Services Committee.
  Ms. TENNEY. Mr. Speaker, I thank the chairman for yielding me the 
time to speak on this important bill and also for his tremendous and 
strong leadership on our committee.

  H.R. 4296 would set reasonable standards for regulators that are 
based primarily on the risk posed by a banking organization's current 
activities and businesses, not on past activities, as you have heard.
  Operational risk standards were created and are a product of the 
European Basel Committee and have been amended twice, actually, since 
that time. But their adaptation still doesn't hit the mark, and that is 
why, though the Basel Committee's proposal is well intentioned, this 
bill and this proposal will amend that to tailor it to the needs and to 
the effectiveness and efficiency of our banks.
  The current framework is based on past activity and will hold 
operational capital on discontinued products, products that banks don't 
even have in their portfolios. This bill will correct those errors by 
allowing our U.S.-based financial regulators to tailor the capital 
requirements they need based on their unique business model.
  H.R. 4296 limits the burden of operational risk capital requirements 
to a bank's current activities and businesses, gives the bank the 
ability to determine risk under forward-looking assessment, and would 
permit adjustment on risk-mitigating factors.
  This bill, as you have heard over and over, does not eliminate the 
Federal Government's ability to assess operational risk or alter the 
regulators' authority to set capital requirements when doing business 
on high-risk customers.
  Mr. Luetkemeyer's bipartisan legislation would create a commonsense 
reform to the Basel standards, and I urge all Members to support it.
  I also want to thank Congressman Meeks, a fellow New Yorker, for 
cosponsoring this legislation.
  Again, I want to thank Mr. Chairman for his great work on our 
committee and also Mr. Luetkemeyer for his hard work, his bipartisan 
work on this bill, for a person who is a banker, a business person from 
a rural area of our country who really understands the need to protect 
consumers.
  Ms. MAXINE WATERS of California. Mr. Speaker, may I inquire as to how 
much time I have remaining?
  The SPEAKER pro tempore (Mr. Woodall). The gentlewoman from 
California has 9\1/2\ minutes remaining.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself the 
balance of my time.
  Mr. Speaker, let's put aside the complex terminology we often use 
with Financial Services legislation and call this bill what it really 
is: a short-sighted giveaway to Wall Street megabanks.
  Approximately ten banks we are talking about, the very largest banks 
in our Nation, have to abide by operational risk standards under an 
enhanced framework. They are required to maintain this additional 
capital so when they continue to engage in risky behavior, like opening 
millions of fake accounts to drive up profits, they will not 
immediately become insolvent, sparking a financial crisis.
  And may I just stop here for a moment and say: it is odd that, given 
the information that we have discovered about some of our megabanks, 
particularly Wells Fargo, that was involved not only in creating fake 
accounts, false accounts in their clients' names, but also selling them 
basically insurance that they did not need, I am wondering why my 
friends on the opposite side of the aisle are not more concerned about 
this operational risk that they take.
  For example, when we talk about operational risk, include in that the 
fines, the fines that we have placed on Wells Fargo and other banks 
that have been caught committing fraud on its clients. It seems to me 
that this would be taken into consideration, and I don't think they are 
going to stop.
  We have gone through a crisis. In 2008, we had this meltdown. We had 
a recession, almost a depression. We had to bail out all of these 
banks, yet we have Members, particularly on the opposite side of the 
aisle, who are doing everything that they can to go back to some of the 
practices that will cause us to be in the same situation we found 
ourselves in in 2008.
  So I would just simply say that this attempt to basically say: don't 
look at our past, no matter how bad we have been, no matter how many 
fines have been placed on them, forget about that. We don't like that.
  So in saying that, what they are basically saying is they are going 
to create more risk and they are going to put banks in the position of 
possibly failing.
  So with that, I would just like us not to forget that our current 
operational risk capital standards didn't come out of nowhere. They are 
still recovering from the 2007 to 2009 financial crisis, which was 
largely caused by unsafe practices by large internationally active 
megabanks and inadequate regulation that ignored past misconduct and 
risky activities.
  The crisis stripped wealth from millions of American families and 
destroyed the economy. Since we passed the Dodd-Frank Act and the 
regulators have implemented standards from the international Basel III 
accord, including our operational risk capital rules, we have made 
tremendous progress to create a better capitalized and more stable 
banking system, and this is bearing results.
  Megabanks have experienced record-breaking profits for the past 
several years. Now they expect us to believe that these commonsense 
rules that take into account their previous behavior was keeping them 
from providing more affordable credit to hardworking consumers in 
search of the American Dream?
  As I mentioned earlier, a bank can still make loans to credit-worthy 
consumers while funding those loans with capital instead of debt.

                              {time}  1645

  Operational capital is not cash locked away at night, but, rather, it 
is the value of a bank's assets minus its liabilities or debts. A well-
capitalized bank that has adequate sources of funding can accommodate 
losses without reducing its lending. In fact, it would be able to lend 
in good times and in bad.
  We should direct the regulators overseeing megabanks like Wells Fargo 
with its years of numerous consumer abuses and JPMorgan Chase with its 
London Whale trading scandal not to ignore these past failures and put 
our constituents at risk.
  My colleagues on the other side of the aisle are rushing through 
deregulatory measures to help their friends on Wall Street. But 
Congress must not forget that it was hardworking consumers across the 
country who paid dearly for Wall Street's faults in the last financial 
crisis. So I would urge Members to vote ``no'' on this bill.
  I am very pleased that while my colleagues on the opposite side of 
the aisle keep talking about this being a bipartisan bill and they 
mention Mr. Meeks'

[[Page H1314]]

name from New York, et cetera, we have the support of the Congressional 
Progressive Caucus and the Congressional Black Caucus in opposition to 
this bill.
  Mr. Speaker, I yield back the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentleman from 
Indiana (Mr. Hollingsworth), who is a member of the Financial Services 
Committee.
  Mr. HOLLINGSWORTH. Mr. Speaker, I am pleased to rise in support of 
this legislation because I think it addresses a fundamental flaw in how 
we have looked at operational risk capital.
  Fundamentally, we want banks to hold capital necessary for the risks 
they are taking today and the likely risks that they may incur losses 
into the future. By purely looking backwards, we are driving down the 
Interstate in the financial system driving by looking in the rearview 
mirror only. That is a terrible mistake by only looking at past risks 
instead of the risks they have today.
  If we want to encourage institutions to become less risky, then we 
need to ensure that they can reduce the amount of capital buffer if 
they are doing less risky activities. This is basically incentivizing 
the right behavior. If we continue to say to institutions: You are 
going to be penalized for the past irrespective of what you may be 
doing today, irrespective of the less risk you may be taking into the 
future, then we are essentially providing them no incentive to become 
less risky.
  I think the lesson after 2008 is making sure that we allow the free 
markets and institutions to act with the right incentives, not the 
wrong incentives. We want them to become less risky over time by their 
own decisions and by their own elections.
  This doesn't change anything about the basic operational risk capital 
that they must maintain, except that it says it should match what they 
are doing today and the activities that they are going to be engaged on 
in the future.
  So I do think this is commonsense legislation. I do think this is a 
thoughtful response to a genuine problem that I hear about back home in 
Indiana frequently. So I continue to support H.R. 4296, and I urge all 
of my colleagues to do the same.
  Mr. HENSARLING. Mr. Speaker, may I inquire how much time I have 
remaining?
  The SPEAKER pro tempore. The gentleman from Texas has 5\1/2\ minutes 
remaining.
  Mr. HENSARLING. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, for the perhaps two dozen people who are watching us on 
C-SPAN at the moment, I think it is important to add a little bit of 
clarity to what we are debating here.
  What we are debating is: What is the proper capital level for a 
federally insured financial institution?
  We know that if that capital level is set too low, then perhaps the 
financial institution could fail. If it is set too high, then they will 
not have the capital to help fund the American Dream--car loans, home 
loans, and small business loans.
  So we have heard a lot about a very simple bill that helps clarify 
one of perhaps two dozen different capital levels that are already 
applicable to our banking institutions, the total loss-absorbing 
capacity, the supplementary leverage ratio, the enhanced supplementary 
leverage ratio, the liquidity coverage ratio, the G-SIB surcharge, and 
the list goes on and on and on.
  We are talking, about, Mr. Speaker, one capital level, the 
operational capital--operational risk capital. So, number one, there 
are a multitude of different capital levels and liquidity levels that 
are already applied to our financial institutions.
  What we are saying is, if we are measuring operational risk, we 
should focus on current risks. Then, if in doubt, Mr. Speaker, I always 
recommend that Members actually read the bills that are being debated. 
It is an always helpful exercise. If you would actually read the bill, 
you would discover in section 1 of the bill, Mr. Luetkemeyer's bill 
says that operational risk capital is based primarily on the risks 
posed by a banking organizations' current activities and business.
  If you look at subparagraph (3) of paragraph (a), it says: `` . . . 
which is not solely based on a banking organization's historic 
losses.''
  So it is not prohibited to look at historic facts, but, primarily, we 
must be focused on the current operational risk.
  As I used earlier in the debate the analogy of who would want their 
life insurance premiums based on the fact that in an earlier point in 
their life they were a skydiver or a scuba diver and now today they are 
facing life as an accountant? Those are different risk profiles.
  If you build a home 4 feet below sea level, yet you sell that home, I 
doubt you want your flood insurance premiums based on the home that you 
already sold. It makes no sense.
  As I also said earlier in this debate, when it comes to proper levels 
of capital, as Federal Reserve Chair Jerome Powell stated earlier today 
before our committee, safety and soundness considerations trump all. 
The regulators have the power to adjust the capital levels.
  Now, this friend on the other side of the aisle talks about, oh, my 
God, this is a huge risk to the economy. It is $22 million. Now, that 
is real money. But, Mr. Speaker, we all know that is not even a 
rounding error here; $22 million over the 10-year budget window is 
approximately a $2 million risk. And from the Congressional Budget 
Office report, they say that it is a small, small chance that the FDIC 
would incur additional costs. So this is not creating more risk to the 
system.
  What we are trying to do is calibrate the appropriate risk. If we are 
going to measure operational risk as opposed to the other 20-some odd 
capital levels, then we ought to be focused on current risk, because if 
we are not, Mr. Speaker, hardworking Americans are losing current 
credit opportunities in order to pay for past operational risk. That is 
not right, that is not fair, and that is not smart.
  We ought to ensure that we have the proper capital level not only to 
make sure that we have a safe and sound financial system but to make 
sure that we are capitalizing the American Dream for our constituents.
  My constituents in the Fifth District of Texas, who live in places 
like Mineola and Forney, who are desperately trying to fund their 
American Dream and put that down payment on a first house, we have got 
to make sure that they are able to.
  So many Americans are living paycheck to paycheck. They need these 
credit opportunities, Mr. Speaker. Let's calibrate one capital ratio 
properly. Let's add a little common sense, and let's not allow the good 
people in Basel, Switzerland--as good as they may be--de facto impose 
what is an irrational capital system on our banking system as we are 
trying to help our small businesses and our families.
  So, Mr. Speaker, I encourage all Members to support H.R. 4296, a 
strong bipartisan bill to help credit opportunities for all families.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Byrne). All time for debate has expired.
  Pursuant to House Resolution 747, the previous question is ordered on 
the bill, as amended.
  The question is on the engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


                           Motion to Recommit

  Ms. MAXINE WATERS of California. Mr. 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 to the bill in its 
current form.
  The SPEAKER pro tempore. 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. 4296 to the Committee on Financial Services with 
     instructions to report the same back to the House forthwith 
     with the following amendment:
       In section 1(b)(2), redesignate subparagraphs (A), (B), 
     (C), (D), and (E) as clauses (i), (ii), (iii), (iv), and (v), 
     respectively, and adjust the margins accordingly.
       Page 2, line 16, strike ``means--'' and insert the 
     following: ``--
       (A) means--

[[Page H1315]]

       Page 3, line 7, strike the period and insert ``; and''.
       Page 3, after line 7, insert the following:
       (B) does not include a global systemically important bank 
     holding company or any subsidiary thereof, if the global 
     systemically important bank holding company or any subsidiary 
     thereof has engaged in a pattern or practice of unsafe or 
     unsound banking practices and other violations related to 
     consumer harm.
       (3) Federal consumer financial law.--The term ``Federal 
     consumer financial law'' has the meaning given that term 
     under section 1002 of the Consumer Financial Protection Act 
     of 2010 (12 U.S.C. 5481).
       (4) Global systemically important bank holding company.--
       (A) In general.--The term ``global systemically important 
     bank holding company'' means--
       (i) a bank holding company that has been identified by the 
     Board of Governors of the Federal Reserve System as a global 
     systemically important bank holding company pursuant to 
     section 217.402 of title 12, Code of Federal Regulations; and
       (ii) a global systemically important foreign banking 
     organization, as defined under section 252.2 of title 12, 
     Code of Federal Regulations.
       (B) Treatment of existing gsibs.--A company or organization 
     described under clause (i) or (ii) of subparagraph (A) on the 
     date of the enactment of this Act shall be deemed a global 
     systemically important bank holding company for purposes of 
     this Act.
       (5) Pattern or practice of unsafe or unsound banking 
     practices and other violations related to consumer harm.--The 
     term ``pattern or practice of unsafe or unsound banking 
     practices and other violations related to consumer harm'' 
     means engaging in all of the following activities, to the 
     extent each activity was discovered or occurred at least once 
     in the 10 years preceding the date of the enactment of this 
     Act:
       (A) Having unsafe or unsound practices in the institution's 
     risk management and oversight of the institution's sales 
     practices, as evidenced by--
       (i) an institution lacking an enterprise-wide sales 
     practices oversight program that enables the institution to 
     adequately monitor sales practices to prevent and detect 
     unsafe or unsound sales practices and mitigate risks that may 
     result from such unsafe and unsound sales practices; and
       (ii) an institution lacking a comprehensive customer 
     complaint monitoring process that--

       (I) enables the institution to assess customer complaint 
     activity across the institution;
       (II) adequately monitors, manages, and reports on customer 
     complaints; and
       (III) analyzes and understands the potential risks posed by 
     the institution's sales practices.

       (B) Engaging in unsafe and unsound sales practices, as 
     evidenced by the institution--
       (i) opening more than one million unauthorized deposit, 
     credit card, or other accounts;
       (ii) performing unauthorized transfers of customer funds; 
     and
       (iii) performing unauthorized credit inquiries for purposes 
     of the conduct described in clause (i) or (ii).
       (C) Lacking adequate oversight of third-party vendors for 
     purposes of risk-mitigation, to prevent abusive and deceptive 
     practices in the vendor's provision of consumer products or 
     services.
       (D) Having deficient policies and procedures for sharing 
     customers' personal identifiable information with third-party 
     vendors for litigation purposes that led to inadvertent 
     disclosure of such information to unintended parties.
       (E) Violating Federal consumer financial laws with respect 
     to mortgage loans, including charges of hidden fees and 
     unauthorized or improper disclosures tied to home mortgage 
     loan modifications.
       (F) Engaging in unsafe or unsound banking practices related 
     to residential mortgage loan servicing and foreclosure 
     processing.
       (G) Violating the Servicemembers Civil Relief Act.

  Ms. MAXINE WATERS of California (during the reading). Mr. Speaker, I 
ask unanimous consent to dispense with the reading of the motion.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from California?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
California is recognized for 5 minutes in support of her motion.
  Ms. MAXINE WATERS of California. Mr. 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.
  We have talked at length today about how H.R. 4296 is a bill for Wall 
Street megabanks, and I deeply disagree with the bill's approach. So I 
offer this motion to recommit not in a manner that sends the bill to 
the committee and kills the bill, but, rather, to attempt to improve 
the bill before the House votes on final passage of the measure.
  Let's discuss the elephant in the room. We all know megabanks have 
been given a free ride in Washington for far too long. During the 
savings and loan crisis, the government had no problem throwing bankers 
in jail for breaking the law. Over 1,000 bank executives were 
prosecuted. But now megabanks just get a fine, a slap on the wrist, for 
harming consumers.
  Since 2010, megabanks have racked up over $160 billion worth of 
fines, yet they keep breaking the law. We have talked about Wells 
Fargo's growing list of illegal actions that have harmed millions of 
consumers. Sure they have been fined, but these fines are just the cost 
of doing business. This soft enforcement approach is just increasing 
their operational risk and losses, which, at the end of the day, will 
impact not only all of their customers, but the broader economy as 
well.
  I hope Republicans and Democrats can all agree that any megabank that 
engages in a pattern or practice of unsafe or unsound banking practices 
and other egregious violations that has resulted in profound consumer 
harm in the last 10 years is not entitled to any benefit of regulatory 
relief provided under this bill.
  So my amendment excludes a megabank like Wells Fargo that has 
fraudulently opened millions of accounts without their customers' 
consent, enrolled consumers in life insurance policies without their 
consent, and forced nearly 1 million Americans to purchase automobile 
insurance that they didn't even need.
  Since 2016, I have been calling for Wells Fargo to face real 
penalties. Last year, I introduced H.R. 3937, the Megabank 
Accountability and Consequences Act, to compel the Federal bank 
regulators to fully utilize existing authorities to stop these 
megabanks from repeatedly flouting the law and harming millions of 
consumers.
  So I was glad to see Janet Yellen on her last day at the Federal 
Reserve take bold action to cap the bank's size until it cleans up its 
act. I am talking about Wells Fargo. This is what Janet Yellen did on 
her last day at the Federal Reserve.
  But we must do more to send a strong message to all megabanks that 
there will be real consequences for their bad actions that mislead, 
abuse, or deceive its customers.
  H.R. 4296, in its current form, would send the opposite message to 
recidivist megabanks. They should not reap the profit of easier 
operational capital requirements while their operational breakdowns are 
only increasing.
  Mr. Speaker, I urge my colleagues to adopt this motion to recommit so 
that we do not reward a recidivist megabank like Wells Fargo for 
repeated operational failures that ripped off millions of consumers.
  Mr. Speaker, I yield back the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I claim the time in opposition.
  The SPEAKER pro tempore. The gentleman from Texas is recognized for 5 
minutes.
  Mr. HENSARLING. Mr. Speaker, again, there are roughly two dozen 
different capital and liquidity levels that are applied to our banks. 
We are talking about, one, operational capital, and whether or not 
operational risk capital ought to be based on current risk.
  Now, I know my friend on the other side of the aisle always likes to 
wave the Wells Fargo flag. Wells Fargo needs to be held accountable. 
There needs to be justice for all who have been wronged. There have 
been roughly $142 million now paid in restitution. There have been over 
$200 million in fines paid.

                              {time}  1700

  The board of Wells Fargo has been replaced. The CEO was fired, and 
the Federal Reserve capped their growth, all under existing 
authorities.
  But under this motion to recommit, potentially, other financial 
institutions could be included. It is not the financial institution 
that counts, at the end of the day. It is capital that could be used to 
fund car loans. It is capital that could be used to fund homes. It is 
capital that could be used to fund the next Apple or the next Amazon. 
Instead, that capital would be put onto the sidelines.
  Again, we are talking about operational risk capital only and should 
it be calibrated for current risk or past risk. That is a completely 
different

[[Page H1316]]

issue from ensuring that customers of Wells Fargo, who clearly have 
been wronged, receive justice and that Wells Fargo has been held 
accountable.
  Again, I would point out this might not have happened if the CFPB 
under the previous administration had been doing their business. They 
should have caught this. But they didn't. Instead, it was the LA Times 
and the Los Angeles city attorney. The CFPB was asleep at the wheel 
under the previous administration.
  So, again, there is existing authority. But if the regulators and 
then-Director Cordray had been doing their job, this wouldn't have 
happened. The evidence was there and it was simply overlooked. We see 
way too many instances of that, Mr. Chair.
  Again, we want to properly calibrate one capital level, operational 
risk capital. That is what the bill of the gentleman from Missouri 
does. We should not be confused about the jihad against banks, because 
banks, ultimately, are still funding the American Dream. You punish our 
constituents, you punish small businesses every time you needlessly 
take away capital that can fund their American dreams.
  I urge a ``no'' vote on the motion to recommit. I urge an ``aye'' 
vote on Mr. Luetkemeyer's bill.
  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. Mr. Speaker, on that I demand the 
yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair 
will reduce to 5 minutes the minimum time for any electronic vote on 
the question of passage of the bill.
  The vote was taken by electronic device, and there were--yeas 185, 
nays 228, not voting 17, as follows:

                             [Roll No. 88]

                               YEAS--185

     Adams
     Aguilar
     Barragan
     Bass
     Beatty
     Bera
     Beyer
     Bishop (GA)
     Blumenauer
     Blunt Rochester
     Bonamici
     Boyle, Brendan F.
     Brady (PA)
     Brown (MD)
     Brownley (CA)
     Bustos
     Butterfield
     Capuano
     Carbajal
     Cardenas
     Carson (IN)
     Cartwright
     Castor (FL)
     Castro (TX)
     Chu, Judy
     Cicilline
     Clark (MA)
     Clarke (NY)
     Clay
     Clyburn
     Cohen
     Connolly
     Cooper
     Correa
     Costa
     Courtney
     Crist
     Crowley
     Cuellar
     Davis (CA)
     Davis, Danny
     DeFazio
     DeGette
     Delaney
     DeLauro
     DelBene
     Demings
     DeSaulnier
     Deutch
     Dingell
     Doggett
     Doyle, Michael F.
     Duncan (TN)
     Ellison
     Eshoo
     Espaillat
     Esty (CT)
     Evans
     Foster
     Frankel (FL)
     Fudge
     Gabbard
     Gallego
     Garamendi
     Gomez
     Gonzalez (TX)
     Gottheimer
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hanabusa
     Hastings
     Heck
     Higgins (NY)
     Himes
     Hoyer
     Huffman
     Jackson Lee
     Jayapal
     Jeffries
     Johnson (GA)
     Johnson, E. B.
     Jones
     Kaptur
     Keating
     Kelly (IL)
     Kennedy
     Khanna
     Kihuen
     Kildee
     Kilmer
     Kind
     Krishnamoorthi
     Kuster (NH)
     Langevin
     Larsen (WA)
     Larson (CT)
     Lawrence
     Lawson (FL)
     Lee
     Levin
     Lewis (GA)
     Lieu, Ted
     Lipinski
     Loebsack
     Lofgren
     Lowenthal
     Lowey
     Lujan Grisham, M.
     Lujan, Ben Ray
     Lynch
     Maloney, Carolyn B.
     Maloney, Sean
     Matsui
     McCollum
     McEachin
     McGovern
     McNerney
     Meeks
     Meng
     Moore
     Moulton
     Murphy (FL)
     Nadler
     Napolitano
     Neal
     Nolan
     Norcross
     O'Halleran
     O'Rourke
     Pallone
     Panetta
     Pascrell
     Pelosi
     Perlmutter
     Peters
     Peterson
     Pingree
     Pocan
     Polis
     Price (NC)
     Quigley
     Raskin
     Rice (NY)
     Richmond
     Rosen
     Roybal-Allard
     Ruiz
     Ruppersberger
     Rush
     Ryan (OH)
     Sanchez
     Sarbanes
     Schakowsky
     Schiff
     Schneider
     Schrader
     Scott (VA)
     Scott, David
     Serrano
     Sewell (AL)
     Shea-Porter
     Sherman
     Sinema
     Sires
     Slaughter
     Soto
     Suozzi
     Swalwell (CA)
     Takano
     Thompson (CA)
     Thompson (MS)
     Titus
     Tonko
     Tsongas
     Vargas
     Veasey
     Vela
     Visclosky
     Wasserman Schultz
     Waters, Maxine
     Watson Coleman
     Welch
     Yarmuth

                               NAYS--228

     Abraham
     Aderholt
     Allen
     Amash
     Amodei
     Arrington
     Babin
     Bacon
     Banks (IN)
     Barletta
     Barr
     Barton
     Bergman
     Biggs
     Bilirakis
     Bishop (MI)
     Bishop (UT)
     Blackburn
     Blum
     Bost
     Brady (TX)
     Brat
     Bridenstine
     Brooks (AL)
     Brooks (IN)
     Buchanan
     Buck
     Bucshon
     Budd
     Burgess
     Byrne
     Calvert
     Carter (GA)
     Chabot
     Cheney
     Coffman
     Cole
     Collins (GA)
     Collins (NY)
     Comer
     Comstock
     Conaway
     Cook
     Costello (PA)
     Crawford
     Culberson
     Curbelo (FL)
     Curtis
     Davidson
     Davis, Rodney
     Denham
     Dent
     DeSantis
     DesJarlais
     Diaz-Balart
     Donovan
     Duffy
     Duncan (SC)
     Dunn
     Emmer
     Estes (KS)
     Farenthold
     Faso
     Ferguson
     Fitzpatrick
     Fleischmann
     Flores
     Fortenberry
     Foxx
     Frelinghuysen
     Gaetz
     Gallagher
     Garrett
     Gianforte
     Gibbs
     Gohmert
     Goodlatte
     Gosar
     Gowdy
     Granger
     Graves (GA)
     Graves (LA)
     Graves (MO)
     Griffith
     Grothman
     Guthrie
     Handel
     Harper
     Harris
     Hartzler
     Hensarling
     Herrera Beutler
     Hice, Jody B.
     Higgins (LA)
     Hill
     Holding
     Hollingsworth
     Hudson
     Hultgren
     Hunter
     Hurd
     Issa
     Jenkins (KS)
     Jenkins (WV)
     Johnson (LA)
     Johnson (OH)
     Johnson, Sam
     Jordan
     Joyce (OH)
     Katko
     Kelly (MS)
     Kelly (PA)
     King (IA)
     King (NY)
     Kinzinger
     Knight
     Kustoff (TN)
     Labrador
     LaHood
     LaMalfa
     Lamborn
     Lance
     Latta
     Lewis (MN)
     LoBiondo
     Loudermilk
     Love
     Lucas
     Luetkemeyer
     MacArthur
     Marchant
     Marino
     Marshall
     Massie
     Mast
     McCarthy
     McCaul
     McClintock
     McHenry
     McKinley
     McMorris Rodgers
     McSally
     Meadows
     Meehan
     Messer
     Mitchell
     Moolenaar
     Mooney (WV)
     Mullin
     Newhouse
     Noem
     Norman
     Nunes
     Olson
     Palazzo
     Palmer
     Paulsen
     Perry
     Pittenger
     Poe (TX)
     Poliquin
     Posey
     Ratcliffe
     Reed
     Reichert
     Renacci
     Rice (SC)
     Roby
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rohrabacher
     Rokita
     Rooney, Francis
     Rooney, Thomas J.
     Ros-Lehtinen
     Roskam
     Ross
     Rothfus
     Rouzer
     Royce (CA)
     Russell
     Rutherford
     Sanford
     Scalise
     Schweikert
     Scott, Austin
     Sensenbrenner
     Sessions
     Shimkus
     Shuster
     Simpson
     Smith (MO)
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Smucker
     Stefanik
     Stewart
     Stivers
     Taylor
     Tenney
     Thompson (PA)
     Thornberry
     Tipton
     Turner
     Upton
     Valadao
     Wagner
     Walberg
     Walden
     Walker
     Walorski
     Walters, Mimi
     Weber (TX)
     Webster (FL)
     Wenstrup
     Westerman
     Williams
     Wilson (SC)
     Wittman
     Womack
     Woodall
     Yoder
     Yoho
     Young (AK)
     Young (IA)
     Zeldin

                             NOT VOTING--17

     Black
     Carter (TX)
     Cleaver
     Cramer
     Cummings
     Engel
     Huizenga
     Long
     Payne
     Pearce
     Smith (WA)
     Speier
     Torres
     Trott
     Velazquez
     Walz
     Wilson (FL

                              {time}  1728

  Messrs. RUTHERFORD, COLE, REED, GROTHMAN, YODER, STIVERS, and DIAZ-
BALART changed their vote from ``yea'' to ``nay.''
  Messrs. COHEN, KHANNA, and RICHMOND changed their vote from ``nay'' 
to ``yea.''
  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  Stated for:
  Ms. WILSON of Florida. Mr. Speaker, had I been present, I would have 
voted ``yea'' on rollcall No. 88.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. HENSARLING. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--yeas 245, 
nays 169, not voting 16, as follows:

                             [Roll No. 89]

                               YEAS--245

     Abraham
     Aderholt
     Allen
     Amash
     Amodei
     Arrington
     Babin
     Bacon
     Banks (IN)
     Barletta
     Barr
     Barton
     Bergman
     Biggs
     Bilirakis
     Bishop (MI)
     Bishop (UT)
     Blackburn
     Blum
     Bost
     Brady (TX)
     Brat
     Bridenstine
     Brooks (AL)
     Brooks (IN)
     Buchanan
     Buck
     Bucshon
     Budd
     Burgess
     Byrne
     Calvert
     Carson (IN)
     Carter (GA)
     Chabot
     Cheney
     Coffman
     Cole
     Collins (GA)
     Collins (NY)
     Comer
     Comstock
     Conaway
     Cook
     Correa
     Costa
     Costello (PA)
     Crawford
     Cuellar
     Culberson
     Curtis
     Davidson
     Davis, Rodney
     Delaney
     Denham
     Dent
     DeSantis
     DesJarlais
     Diaz-Balart
     Donovan
     Duffy
     Duncan (SC)
     Dunn
     Emmer
     Estes (KS)
     Farenthold
     Faso
     Ferguson
     Fitzpatrick
     Fleischmann
     Flores
     Fortenberry
     Foxx
     Frelinghuysen
     Gaetz
     Gallagher
     Garrett
     Gianforte
     Gibbs
     Gohmert
     Goodlatte
     Gosar
     Gottheimer
     Gowdy
     Granger
     Graves (GA)
     Graves (LA)

[[Page H1317]]


     Graves (MO)
     Griffith
     Grothman
     Guthrie
     Handel
     Harper
     Harris
     Hartzler
     Hensarling
     Herrera Beutler
     Hice, Jody B.
     Higgins (LA)
     Hill
     Holding
     Hollingsworth
     Hudson
     Hultgren
     Hunter
     Hurd
     Issa
     Jenkins (KS)
     Jenkins (WV)
     Johnson (LA)
     Johnson (OH)
     Johnson, Sam
     Jordan
     Joyce (OH)
     Katko
     Kelly (MS)
     Kelly (PA)
     King (IA)
     King (NY)
     Kinzinger
     Knight
     Kustoff (TN)
     Labrador
     LaHood
     LaMalfa
     Lamborn
     Lance
     Latta
     Lewis (MN)
     LoBiondo
     Loudermilk
     Love
     Lucas
     Luetkemeyer
     MacArthur
     Marchant
     Marino
     Marshall
     Massie
     Mast
     McCarthy
     McCaul
     McClintock
     McHenry
     McKinley
     McMorris Rodgers
     McSally
     Meadows
     Meehan
     Meeks
     Messer
     Mitchell
     Moolenaar
     Mooney (WV)
     Mullin
     Murphy (FL)
     Newhouse
     Noem
     Norman
     Nunes
     O'Halleran
     Olson
     Palazzo
     Palmer
     Paulsen
     Perry
     Peterson
     Pittenger
     Poe (TX)
     Poliquin
     Polis
     Posey
     Ratcliffe
     Reed
     Reichert
     Renacci
     Rice (NY)
     Rice (SC)
     Roby
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rohrabacher
     Rokita
     Rooney, Francis
     Rooney, Thomas J.
     Ros-Lehtinen
     Roskam
     Ross
     Rothfus
     Rouzer
     Royce (CA)
     Ruppersberger
     Russell
     Rutherford
     Scalise
     Schneider
     Schrader
     Schweikert
     Scott, Austin
     Scott, David
     Sensenbrenner
     Sessions
     Shimkus
     Shuster
     Simpson
     Sinema
     Smith (MO)
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Smucker
     Stefanik
     Stewart
     Stivers
     Suozzi
     Taylor
     Tenney
     Thompson (PA)
     Thornberry
     Tipton
     Turner
     Upton
     Valadao
     Veasey
     Wagner
     Walberg
     Walden
     Walker
     Walorski
     Walters, Mimi
     Weber (TX)
     Webster (FL)
     Wenstrup
     Westerman
     Williams
     Wilson (SC)
     Wittman
     Womack
     Woodall
     Yoder
     Yoho
     Young (AK)
     Young (IA)
     Zeldin

                               NAYS--169

     Adams
     Aguilar
     Barragan
     Bass
     Beatty
     Bera
     Beyer
     Bishop (GA)
     Blumenauer
     Blunt Rochester
     Bonamici
     Boyle, Brendan F.
     Brady (PA)
     Brown (MD)
     Brownley (CA)
     Bustos
     Butterfield
     Capuano
     Carbajal
     Cardenas
     Cartwright
     Castor (FL)
     Castro (TX)
     Chu, Judy
     Cicilline
     Clark (MA)
     Clarke (NY)
     Clay
     Clyburn
     Cohen
     Connolly
     Cooper
     Courtney
     Crist
     Crowley
     Davis (CA)
     Davis, Danny
     DeFazio
     DeGette
     DeLauro
     DelBene
     Demings
     DeSaulnier
     Deutch
     Dingell
     Doggett
     Doyle, Michael F.
     Duncan (TN)
     Ellison
     Eshoo
     Espaillat
     Esty (CT)
     Evans
     Foster
     Frankel (FL)
     Fudge
     Gabbard
     Gallego
     Garamendi
     Gomez
     Gonzalez (TX)
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hanabusa
     Hastings
     Heck
     Higgins (NY)
     Himes
     Hoyer
     Huffman
     Jackson Lee
     Jayapal
     Jeffries
     Johnson (GA)
     Johnson, E. B.
     Jones
     Kaptur
     Keating
     Kelly (IL)
     Kennedy
     Khanna
     Kihuen
     Kildee
     Kilmer
     Kind
     Krishnamoorthi
     Kuster (NH)
     Langevin
     Larsen (WA)
     Larson (CT)
     Lawrence
     Lawson (FL)
     Lee
     Levin
     Lewis (GA)
     Lieu, Ted
     Lipinski
     Loebsack
     Lofgren
     Lowenthal
     Lowey
     Lujan Grisham, M.
     Lujan, Ben Ray
     Lynch
     Maloney, Carolyn B.
     Maloney, Sean
     Matsui
     McCollum
     McEachin
     McGovern
     McNerney
     Meng
     Moore
     Moulton
     Nadler
     Napolitano
     Neal
     Nolan
     Norcross
     O'Rourke
     Pallone
     Panetta
     Pascrell
     Pelosi
     Perlmutter
     Peters
     Pingree
     Pocan
     Price (NC)
     Quigley
     Raskin
     Richmond
     Rosen
     Roybal-Allard
     Ruiz
     Rush
     Ryan (OH)
     Sanchez
     Sanford
     Sarbanes
     Schakowsky
     Schiff
     Scott (VA)
     Serrano
     Sewell (AL)
     Shea-Porter
     Sherman
     Sires
     Slaughter
     Soto
     Swalwell (CA)
     Takano
     Thompson (CA)
     Thompson (MS)
     Titus
     Tonko
     Tsongas
     Vargas
     Vela
     Velazquez
     Visclosky
     Wasserman Schultz
     Waters, Maxine
     Watson Coleman
     Welch
     Wilson (FL)
     Yarmuth

                             NOT VOTING--16

     Black
     Carter (TX)
     Cleaver
     Cramer
     Cummings
     Curbelo (FL)
     Engel
     Huizenga
     Long
     Payne
     Pearce
     Smith (WA)
     Speier
     Torres
     Trott
     Walz


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Byrne) (during the vote). There are 2 
minutes remaining.

                              {time}  1737

  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________