[Congressional Record Volume 164, Number 41 (Thursday, March 8, 2018)]
[Senate]
[Pages S1566-S1567]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



    Economic Growth, Regulatory Relief, and Consumer Protection Bill

  Ms. WARREN. Mr. President, 10 years ago, millions of American 
families were on the verge of devastation. The failure of Bear Stearns 
in March of 2008 was the first major signal of a coming financial 
crisis that would cost 9 million people their jobs and millions more 
people their homes or their savings. Lives and plans and dreams would 
be crushed--and even after the economy began to recover its footing, 
millions of American families would have to spend years just to get 
back to where they started before 2008. A lot of those families have 
given up the dream of home ownership forever, and many are still 
struggling today.
  But in the next few days, with broad support among Republicans and 
far too much support among Democrats, the Senate is on the verge of 
passing a bill that puts American families in danger of that same 
devastation all over again.
  Over the last few days, I have talked about what this bill will do. I 
have explained how it strips consumer protections for American families 
who are trying to buy a home, particularly in low-income communities 
and communities of color. I have talked about how this bill will peel 
away vital safeguards we put on large banks after the financial crisis 
to make sure they can't crash the economy all over again.
  Now, as the bill is on the verge of passing the Senate, I want to 
stop and just ask a basic question: Why? Who exactly is asking us to do 
this?
  Our constituents hate it. A recent poll showed that an overwhelming 
majority of Americans oppose this bill. So why is it that the only 
thing Washington can agree to do on a bipartisan basis in this Congress 
is to help out giant banks?
  I will tell you why. Washington's amnesia is legendary. We go through 
the same cycle like clockwork. When the economy is looking good, 
lobbyists flood Congress and tell politicians it is perfectly safe to 
roll back the rules on the big banks. It is always the same set of 
arguments: America needs more lending for more economic growth. Our 
country is losing ground to its competitors. Banks have learned their 
lesson and don't need rules to behave responsibly. And here is the 
kicker question: What could possibly go wrong? Every time, it works.
  It works even though the lessons of history are clear. Strong 
financial rules help create a strong economy that works for everyone, 
and when we weaken the rules, it sets the stage for another financial 
crisis--a crisis that, every time, hits America's working families the 
hardest.
  Let's go back to the beginning of the 20th century. A lot of our 
financial regulations in the United States come from the Great 
Depression. Before then, Washington ignored the booms and busts that 
rocked the country every few years. But after the unemployment rate 
topped 20 percent in the 1930s and the U.S. economy shrunk by about 30 
percent, Washington--this Congress--finally got its act together to 
pass some laws.
  Here is what they did. First, they looked at all of the places where 
people put their money--banks, home, markets--and then they built 
regulators for all of those different kinds of investments. Congress 
did something really smart. It put a law in place called the Glass-
Steagall Act. It broke up the biggest banks, and it separated the banks 
that take deposits and make mortgages from high-risk institutions like 
investment banks.
  This worked reasonably well for about half a century. There wasn't a 
single major financial crisis. But then, starting in the late 1970s and 
early 1980s, bankers, looking for higher profits and bigger paychecks, 
set their sights on government rules. They wanted less regulation and 
more freedom to trick their customers, to trap their customers, and to 
cheat their customers.
  It started in the savings and loan industry. These institutions, 
which specialized in home mortgages, started to become insolvent 
because of the rising inflation and flaws in their business model. So 
the bank lobbyists had a solution: Deregulate them. They said: Instead 
of just safe mortgages, why don't we let these institutions put out 
some riskier stuff in hopes that some of these gambles will pay off 
big. The Reagan administration agreed, but the plan failed. Over the 
next decade, taxpayers spent $132 billion to bail out these 
institutions. That was in the 1980s.
  But why stop there? Deregulating the thrifts, as disastrous as it 
was, was just small ball. Thrifts were allowed to gamble only with a 
chunk of their own money. The lobbyists wanted to tear down all of the 
barriers, throwing savings accounts and risky, complicated securities 
into one big institution and then letting that bank gamble with all of 
it.
  They dreamt of a Wall Street where banks could take the money in 
grandma's checking account and use it to gamble in the markets. They 
wanted to tear down the wall Glass-Steagall had created between boring 
banking and high-risk trading.
  In 1999, the conditions were perfect to rip up the rules. Why? The 
economy was cruising. Unemployment was down to 4.2 percent. The markets 
were on fire. The Dow, the S&P 500, and the NASDAQ smashed every record 
in their paths. In fact, the NASDAQ grew at 85.6 percent in 1999, the 
biggest annual jump for a major index in U.S. history. One respected 
finance professor gushed:

       It's amazing. Every year we say it can't be another year of 
     20 percent-plus (gain)--and then every year it's a 20 
     percent-plus gain.

  It was the prime time for the bank lobbyists to strike. They swarmed 
Capitol Hill pushing, pulling, cajoling, running from the House to the 
Senate and back again, and most of this was happening behind closed 
doors. But on a clear, cold day in February of 1999, eight bankers and 
two lobbyists testified in front of the Senate Banking Committee, and 
the knives were out for Glass-Steagall. The euphemism people used then 
was ``modernization.'' When lobbyists start talking about modernization 
and clarification, it is time to buy a parachute.

  Let me tell you about KeyCorp, one of the banks that would be taken 
off the watch list in the bill we are going to be voting on in the 
coming days. Back in 1999, the CEO of that company testified that the 
``financial law modernization that strengthens our financial 
institutions in and of itself will enhance safety and soundness.'' 
Think about what that means. Behind the buzzwords, that CEO was making 
the amazing claim that if banks were just allowed to take more risks 
and make more short-term profits, it would actually make the financial 
system safer. In other words, if we just deregulate the banks, they 
will become safer.
  He wasn't the only one to make a claim like that. The vice chairman 
of JPMorgan said: ``There is a consensus shared by most financial firms 
and their customers, as well as policymakers, that these rules restrict 
competition, reduce consumer choice, and are not necessary to protect 
consumers or insured financial institutions.'' In other words, rules 
are the problem--if banks could just do whatever they wanted, 
everything would be great.
  Guess what. The pitch worked. Nine months later, in late 1999, a bill 
to repeal key parts of Glass-Steagall and roll back other financial 
rules passed both Houses of Congress overwhelmingly. Ninety Senators 
voted yes. Senator after Senator, including quite a few who are still 
here today, came to the Senate floor and praised the bill for 
modernizing our financial rules and getting rid of unnecessary and 
outdated requirements.
  But not everyone was fooled. Some Senators knew better. Senator Paul 
Wellstone from Minnesota warned that Congress ``seem[s] determined to 
unlearn the lessons from our past mistakes . . . [and] is about to 
repeal [Glass-Steagall] without putting any comparable safeguard in its 
place.''
  Senator Byron Dorgan of North Dakota was especially prescient. He 
said:

       I think we will look back in 10 years' time and say we 
     should not have done this but we did because we forgot the 
     lessons of the past, and that that which is true in the 
     1930's is true in 2010. . . . We now have decided in the name 
     of modernization to forget the lessons of the past, of safety 
     and of soundness.

  But Congress ignored their warnings. For the bargain price of $300 
million in lobbyist bills, the big banks saw their wildest dreams come 
true. With the repeal of Glass-Steagall, too-big-to-fail megabanks were 
born. Citibank became Citigroup. J.P. Morgan became

[[Page S1567]]

JPMorgan Chase. The banks got bigger and bigger and bigger.
  But the lobbyists weren't done yet. Over the next decade, they tried 
over and over to expand the loopholes that they had punched until both 
the regulators and the regulations gave way. By the middle of the 
decade, the conditions were right. Markets broke records. The 
unemployment rate was below 5 percent. It was time for the lobbyists to 
go at it again. Hand-tailored suits and Gucci loafers swarmed Capitol 
Hill. Meetings were scheduled. So were fundraisers. Their efforts again 
occasionally spilled out into the public hearing rooms.
  This pitch might sound familiar. In 2006, the head of risk at 
Citigroup, on behalf of the Financial Services Roundtable, told the 
House Financial Services Committee: ``The U.S. needs to modernize its 
capital regulations, and there are a variety of new approaches that all 
represent a significant improvement over the current system.'' In other 
words, the regulations are outdated.
  Steve Bartlett, a former Congressman who was a lobbyist for the 50 
biggest banks, told the Senate Banking Committee in 2005: ``Outdated 
laws and regulations impose significant, and unnecessary, burdens on 
financial services firms, and these burdens not only make our firms 
less efficient, but also increase the cost of financial products and 
services to consumers.'' In other words, set the banks free, and let 
them do whatever they want. What could possibly go wrong?
  In 2005, the head of the American Bankers Association told the 
committee: ``The cost of unnecessary paperwork and red tape is a 
serious long-term problem that will continue to erode the ability of 
banks to serve our customers and support the economic growth of our 
communities.'' In other words, in the end, these rules hurt consumers. 
Let the banks do whatever they want to consumers.
  Then, just as the lobbyists were gaining momentum, the economy they 
created crashed. It was 2008, and millions of families lost their 
homes, millions lost their savings, and millions lost their jobs. But 
the lobbyists didn't lose their jobs. They peddled myths about the 
economy and the financial system, and they kept right on working for 
the big banks. All during the efforts to pass financial regulations to 
get our economy out of the ditch, the bank lobbyists were there. They 
pulled in more than $1 million a day lobbying against financial reform.
  When the American people started to demand action in the wake of the 
2008 crash, the reforms passed anyway. But the lobbyists didn't give 
up. They didn't go away. Before the ink was dry on Dodd-Frank, they 
jumped right back in and started lobbying to roll back the new rules.
  So here we are again. It took years, but the economy is humming 
again. In 2016, the unemployment rate dipped below 5 percent for the 
first time since before the 2008 crisis. In 2017, the Dow jumped 25 
percent, and the NASDAQ grew by 28 percent. And you know what that 
means--it means the bank lobbyists have once again taken center stage, 
insisting that it is safe to deregulate their clients again, all in the 
name of economic growth and empowering consumers. It is the same 
argument as before.
  Last spring, bank lobbyist Greg Baer said:

       After nearly a decade of fundamental and continuing changes 
     to financial regulation, now is an opportune time to review 
     the efficacy of our current bank regulatory framework. My 
     testimony will focus on reforms that could directly and 
     immediately enhance economic growth.

  In other words, turn the big banks loose, and let's see what they can 
do.
  Harris Simmons, the CEO of Zions Bank, which will be kicked off the 
watch list under the bill that is now under consideration, recently 
testified that ``the uncertainty surrounding [Dodd-Frank reforms] can 
cause banks to withdraw or limit certain kinds of lending.'' To put it 
another way: Get out of the way and let the big banks cheat their 
customers again. It is good for bank profits.
  Here we go again. I get it. Our financial regulations need work. 
There are things we could do to reduce the load on community banks, and 
there are still big dangers to consumers that we should take up. But 
this bill isn't about the unfinished business of the last financial 
crisis; this bill is about laying the groundwork for the next financial 
crisis.
  I will make a prediction. This bill will pass, and if the banks get 
their way, in the next 10 years or so, there will be another financial 
crisis. Of course, when the crash comes, the big banks will throw up 
their hands and say that it is not their fault, that nobody could have 
seen it coming. Then they will run to Congress and beg for bailout 
money, and--let's be blunt--they will probably get it. But just like in 
2008, there will be no bailout for working families. Jobs will be lost, 
and lives will be destroyed. The American people, not the banks, will 
once again bear the burden.
  Then, caught in a fog of amnesia, the lobbyists and regulators and 
elected officials in Washington will scratch their heads and wonder how 
in the world it could have possibly happened again. But the American 
people won't be confused about it at all. They never are. They are much 
smarter than the people around here give them credit for. They won't 
wonder why it happened; they will know why it happened. They will know 
it was because the people in Washington ignored working people in order 
to do the bidding of the guys in fancy suits and the handmade shoes who 
write the fat campaign checks. Look at the numbers. Seventy-eight 
percent of Americans think big banks have too much control over Members 
of Congress. That includes 68 percent of people who voted for Donald 
Trump. Everyone knows that Congress sold them out last time, and 
everyone expects it to happen again this time.
  As we prepare to vote on this bill, I ask my colleagues one more 
time, do the job you were sent here to do. Stand up for the people who 
sent us here. Stop doing the bidding of big bank lobbyists, and start 
working on the things that can make a difference in the lives of 
working people around this country. The American people need it. The 
American people deserve it. The American people will demand it. If you 
refuse to do it, don't be surprised when they hold you responsible.
  Mr. President, I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The senior assistant legislative clerk proceeded to call the roll.
  Mr. COONS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.