[Congressional Record Volume 164, Number 91 (Monday, June 4, 2018)]
[Senate]
[Pages S2958-S2959]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                              Volcker Rule

  Mr. BROWN. Mr. President, last winter, this body passed a $1.5 
trillion deficit-financed tax cut for millionaires, for billionaires 
especially, and for corporations that ship jobs overseas. More than 80 
percent of the benefits will go to the top 1 percent of the wealthiest 
people by the end of this decade.
  Two weeks ago, Congress passed another big giveaway to Wall Street, 
loosening taxpayer protections on big banks that had received a 
combined $239 billion in taxpayer bailouts. We know Wall Street can 
never get enough handouts. Too many people in this body, too many 
people down the hall in the House of Representatives, too many people 
in the Oval Office, too many people in Washington never get tired of 
giving these handouts away. From the day President Obama, almost a 
decade ago, signed Wall Street reform into law, a top Wall Street 
lobbyist said that it was halftime, meaning the game was not over, and 
they were going to keep fighting back.
  Before the ink was dry on his signature, those lobbyists went to work 
trying to undo the rules we put in place to protect taxpayers and 
consumers. We are seeing the result of that lobbying in Congress, and 
we are seeing it at the agencies that are supposed to be policing our 
financial industry.
  Last week, the Federal Reserve announced proposed changes to what is 
known as the Volcker rule. We put this rule in place after the crisis 
to stop big banks from taking big risks with Americans' money. Those 
complicated, risky bets were a big reason for the financial crisis that 
devastated our economy, cost millions of Americans their jobs, cost 
millions of Americans much of their savings, and left taxpayers on the 
hook to clean up Wall Street's mess.
  Lehman Brothers invested heavily in toxic mortgage-backed securities, 
eventually leading to $32 billion in trade losses and the biggest 
bankruptcy in U.S. history. They took bank deposits, putting the U.S. 
taxpayer on the hook for those losses.
  Hedge funds sponsored by Bear Stearns, which also took Americans' 
individual deposits, suffered massive losses on complex bets based on 
exotic subprime mortgages. During the crisis, Merrill Lynch, Morgan 
Stanley, and Citigroup also lost big on bets backed by subprime 
mortgages, and Goldman Sachs had to bail out a hedge fund.
  Congress instructed the Federal Reserve to write strict rules to 
prevent that from ever happening again--to make sure that banks use the 
taxpayer safety nets to serve their customers, not bet against them.
  Banks should be in the business of making investments in the real 
economy, not casino-style trades using families' checking and savings 
accounts. It took agencies more than 3 years to finalize the Volcker 
rule, which was completed in 2013 after the consideration of thousands 
upon thousands of public comments. Now they want to undo it all?
  The rollbacks announced last week would gut core components of the 
Volcker rule. They would make it easier for banks to take speculative 
bets. The New York Times stated that the balance of power will tip 
immediately to traders from regulators. It will shift the power from 
watchdogs to the big banks themselves, from public servants who are 
looking to protect the public's interests to executives who are making 
tens of millions--occasionally, hundreds of millions--of dollars in 
their trading.

  Instead of establishing strict limits on banks, the proposed rule 
changes will ask us to trust the banks to guard against risky trades. 
It says: Go ahead and police yourselves. Yet we know how well that 
turned out the last time.
  The rule changes will allow banks to more easily place bets under the 
guise of so-called hedging. This increases the chances of yet another 
scandal like the London Whale episodes of 2012 when JPMorgan lost $6 
billion in one bad bet. Do we want to make it easier for them to do it 
again with Americans' savings accounts? Why weaken the rules now?
  It is not as if the banks are suffering under this rule. Think about 
how the banks are doing now. The FDIC released new data last month that 
banks increased their profits by 13 percent last year, and that is 
before accounting for the windfall from the tax bill. When you add in 
the tax bill, banks' profits went up 28 percent last year on top of the 
double-digit percent almost every year from 2010 and 2011 and 2012 and 
2013 and 2014 and 2015 and 2016 and 2017.
  The banking sector bought back $77 billion worth of stock last year. 
Last year, the CEOs of the six largest banks got an average raise of 22 
percent. These were CEOs who were already making millions and millions 
of dollars. Keep in mind that the average bank teller in this country 
makes about $12.50 an hour. Yet the CEOs of these banks--some of them 
already making $10 million and $20 million a year--got a 22-percent 
increase.
  This is not some dying industry that is crying out for help. If 
anything, it is an industry that needs a more watchful eye. The largest 
banks paid $240 billion worth of fines 10 years ago after the collapse. 
Wells Fargo can't go more than a few months without having a scandal. 
Deutsche Bank is struggling with poor risk management and inadequate 
capital.
  So why put taxpayers and bank customers at risk? We have a pretty 
good idea why.
  Just take a look who this administration has put in charge. The White 
House looks like a retreat for Wall Street executives. We have former 
OneWest banker Joseph Otting running the Office of the Comptroller of 
the Currency. As if the Volcker rule rollback were not bad enough, he 
announced last week that he wants to get banks into the business of 
financing payday loans. Otting has other plans to gut the Community 
Reinvestment Act--a 40-year-old law that ensures that banks serve their 
communities.
  Fed Vice Chair Randal Quarles recently gave a speech, saying that, 
just as we predicted, the Federal Reserve wants to loosen rules on 
foreign megabanks--these banks that are in this country, like Deutsche 
Bank and Santander and some of these big banks--that have, clearly, 
from time to time, abused the public trust. We are going to loosen the 
rules that regulate foreign banks in this country? He said last week's 
changes to the Volcker rule were just the start. He said it was the 
first effort to weaken the rule.
  People like Randal Quarles--people who didn't spot the crisis the 
last time they were watchdogs, when they were in government 15 years 
ago, people who profited off the very crisis they failed to prevent--
may have forgotten what these risky bets did to so many families in 
this country. Maybe they have succumbed to the collective amnesia that 
affects more and more people in this town. Families in my State haven't 
forgotten. Workers' savings were wiped out. They watched college

[[Page S2959]]

accounts and retirement savings shrink and shrink. Hopes and dreams 
were dashed.
  Americans can't afford to go back to the days when Wall Street 
gambled with their hard-earned money. The crisis has cast a long shadow 
over these families. Today, 4 out of 10 adults can't afford an 
emergency expense of $400. If your car breaks down and it costs $500 or 
$600, you don't have the money to do that if you are much of the 
American public. You go to a payday lender who charges you exorbitant 
interest rates. You go back and go back because you can't get ahead.
  One in four renters pays more than 50 percent in income to keep a 
roof overhead. One in four renters pays 50 percent in income or more to 
keep a roof overhead. One bad thing happens in their lives--a child 
gets sick; they miss work for a few days; they can't make payments 
because they have had broken-down cars. All kinds of things can happen. 
They can be evicted, and many of them are. More and more workers have 
irregular schedules and incomes that vary up and down from month to 
month. It is those Americans we are sent here to serve.
  It also comes back to whose side you are on. Are you going to stand 
with hard-working Americans or with risky Wall Street traders? We need 
to go home and listen a little more to the people we serve and a little 
less to special interests. That is how we create an economy that values 
work and that serves the common good, not by falling all over ourselves 
in this body to serve Wall Street.