[Congressional Record Volume 169, Number 53 (Thursday, March 23, 2023)]
[House]
[Pages H1331-H1332]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                BANKING AND FINANCIAL SECTOR CHALLENGES

  The SPEAKER pro tempore. The Chair recognizes the gentlewoman from 
Ohio (Ms. Kaptur) for 5 minutes.
  Ms. KAPTUR. Mr. Speaker, I rise today to highlight major challenges 
plaguing our banking and financial sector to the detriment of everyday 
Americans. Specifically, I refer to banking deregulation, lax 
oversight, and major consolidation.
  Albert Einstein said that insanity is doing the same thing over and 
over again and expecting different results. Well, the most recent 
financial market tremors follow the collapse of Silicon Valley Bank in 
California and Signature Bank in New York. These events remind us that 
our economy is still digging out of the 2008 massive market collapse.
  The key question is: Do U.S. banking laws still allow too much 
speculative financial activity and excessive risk-taking?
  Just three trillion-dollar megabanks now control one-third of U.S. 
banking assets. This chart tells the story. That is too much power by 
too few.
  The financial crash of 2008 was a harsh reminder that, throughout 
U.S. history, speculators have squeezed through every regulatory 
keyhole to bring their much higher-risk, reckless, speculative ventures 
inside the confines of what should be prudent banking.
  Regulators must provide firm separation between speculation and 
prudent banking. Regulators must provide firm separation. Do they hear 
me?
  SVB was investing in speculative Chinese tech startups. How about 
that? Signature was intertwined with Swiss Bank's operations and 
cryptocurrency. Well, both banks collapsed.
  History has taught us that speculation, derivatives, and venture 
capital are not normal banking activities. They are much higher risk, 
and their complexity and uncertainty can threaten the assets of other 
depositors like me and my constituents who choose not to highly 
leverage their assets. We should protect American depositors from 
rampant speculation.
  The Biden administration is working to stem the bleeding. Management 
of both failed banks was shown the door, and the Federal Reserve, for 
the moment, put in place programs for banks or credit unions to meet 
their depositors' withdrawal requests.
  After these collapses of SVB and Signature, both high-risk mega 
coastal banks, I might add, where all of our major financial problems 
have started over my term of service, which is long, we are all 
enduring a truly troubling trend of massive bank consolidation that has 
been happening since the 1980s.
  The pandemic pushed even more consolidation into overdrive. Another 9 
percent of all branch locations in the U.S. closed between 2017 and 
2021, a loss of 7,500 more brick-and-mortar locations in places where 
the American people live and work.
  The empty buildings pockmark every community across our country. The 
branch closure rate doubled again during the pandemic, and more than 
4,000 more branches have closed since March 2020.
  People, pay attention. The money is walking away from your community 
to the very institutions that are causing the problem.
  The rate doubled for bank closures from 99 per month during the 10 
years prior to the pandemic to now 201 closings per month. The big fish 
are eating the smaller fish.
  Those of us who have fought against the megabank culture that 
squashes prudent banking need look no further than the severe 
diminishment of market share held by local and regional banks over the 
last 40 years.
  Step one is to reinstate Glass-Steagall's separation of prudent 
banking and speculation. The second is to develop a decoupled financial 
system that strengthens regional banks to manage an increasing share of 
local housing finance and commercial loans.
  Soon, I will reintroduce in this Congress the Return to Prudent 
Banking Act, and I invite all of my colleagues on a bipartisan basis to 
join me. This bill would put America back on a path to fixing reckless 
speculation inside our banking and financial sector. As a result, no 
single company could be both an investment and a commercial bank.

[[Page H1332]]

  This structure worked for decades. It proved to be a sound way of 
creating local economic growth and limiting the systemic risks posed by 
hiding reckless speculation and venture capital inside our financial 
institutions.
  They have a right to exist but put them elsewhere in the system. 
Depositors' safety, not speculation, must be our objective.
  We must strengthen regional and community banks. In the wake of SVB 
and Signature Bank, the time is now. Congress must implement real 
reforms to protect depositors and the American economy.
  Congress must demonstrate we stand with the American people and their 
communities, not just for the coastal scions of massive wealth who use 
the safety of our deposits for their reckless, speculative gambles. 
Prudent banking should be rewarded, not reckless behavior.

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