Jeb Hensarling

Mr. HENSARLING

Mr. HENSARLING. Mr. Speaker, I yield myself the balance of my time. Mr. Speaker, as I listened very carefully to my friend and ranking member describe this parade of horribles that is going to befall our economy if H.R. 4790 is enacted, I would gently remind her that a majority of her own Members supported it. So all of these accusations that she has made against the majority party, I hope, and believe, she has, obviously, foisted upon the majority of her own Members who clearly do not support her in what she is attempting to do. In addition, Mr. Speaker, I would remind all Members, contrary to the Volcker rule, that weighs in at almost 1,000 pages, H.R. 4790 weighs in at 8 pages. If you read the bill, you will discover that it does not repeal the Volcker rule. Again, I don't know what bill the ranking member was debating, but it is not H.R. 4790. Now, Mr. Speaker, just think about it for a second. Paying your taxes--tax day is coming up--is not a pleasant time of year. And as unpleasant as that time is, think if you had to file your taxes with five different Federal agencies. Think about the fact that if you had a question about your taxes, that you had to call the Internal Revenue Service, you had to call the Department of Labor, you had to call the EPA, and you had to call the CFPB. What if you had five different agencies interpreting the Internal Revenue Code, all enforcing it in different ways? That would take one of the worst days of the year and compound it mightily. What the gentleman from Arkansas is trying to do on the majority side, and what the gentleman from Illinois is trying to do on minority side, is say: If we are going to have a Volcker rule--one of the most complicated, complex rules ever devised by the mind of man--maybe we ought to have one agency interpret it and one agency enforce it. Why do we do that, Mr. Speaker? We do that so that capital can be available to the people I spoke about in my opening statement. So that Jeff and Arlis can have capital to expand their small businesses on Main Street. That is what this is all about--so that our small businesses can thrive, so that the people who want to own a home can thrive, and so that this economy can grow. This is commonsense. It is why it is a strong, bipartisan measure-- another strong, bipartisan measure that, unfortunately, our ranking member chooses not to partake in. And it is one of the reasons why, unfortunately, Mr. Speaker, if we listen to that side of the aisle--or at least a particular voice--we will continue to have bad economic growth. We need good economic growth for all of the American people. Mr. Speaker, I urge all Members to support H.R. 4790, and I yield back the balance of my time.

Mr. HENSARLING. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Ohio (Mr. Davidson), a good member of the Financial Services Committee.

Mr. HENSARLING

Mr. HENSARLING. Mr. Speaker, I thank the gentleman for yielding. I also thank him for his friendship, and I thank him for his leadership in fiscal sanity. Along with Chairman Goodlatte, I will be leaving Congress at the end of this year. Serving in Congress has been the greatest privilege of my life, but I leave with one great regret, and that regret is my inability to convince my colleagues of the peril of ignoring the debt trajectory this Nation is on. We cannot continue to spend money we do not have. Mr. Speaker, my iPad is awash--awash--of reports about how our spending trajectory is unsustainable. CBO, OMB, private foundations, they all conclude the same thing: the picture of national bankruptcy is ugly. It wasn't that many years ago that we saw it in Greece. We saw soup kitchens, padlocked factories, hospitals that could no longer turn on the lights, college-educated people forced into subsistence agriculture. Mr. Speaker, I don't think America is going to be Greece. I wish I knew it for a fact. But here is what I do know: if we don't quit spending money we don't have, we will become a second-rate economic power, a second-rate military power, and, frankly, a second-rate authority, moral authority, as we become the first generation in America's history to leave the next generation with a lower standard of living. That simply is not unintelligent; that is immoral. Can we have that stain on our record for generations to come? Mr. Speaker, frankly, I wish we were debating a spending limit amendment today, which is my preference; but at least the balanced budget amendment is a fair fight so that we at least do not mortgage our children's future, our grandchildren's future. Again, there is a moral imperative. We know what Churchill once said about us, and that is: Americans can usually be counted on to do the right thing once they have exhausted every other possibility. It is a humorous comment for a situation that is not humorous. We cannot wait. This is the most foreseeable crisis in America's future. Today we can make history. Today we can ensure that we show fidelity to our Founding Fathers and to future generations and, for once, going forward, ensure that it is enshrined in our most sacred document that we balance the budget and do not mortgage our children's future.

Mr. HENSARLING

Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 780, I call up the bill (H.R. 4293) to reform the Comprehensive Capital Analysis and Review process, the Dodd-Frank Act Stress Test process, and for other purposes, and ask for its immediate consideration in the House.

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.

Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise today in very strong support of H.R. 4293, the Stress Test Improvement Act of 2017. I want to thank the gentleman from New York (Mr. Zeldin), who is a real workhorse on the Financial Services Committee and a real leader in trying to ensure that we have affordable credit for our constituents so that they can achieve the American Dream. In his legislation, he will bring clarity and reasonableness to the stress test regime. Currently, as we know, banks face two separate, legally mandated stress tests: the CCAR and the DFAST. Together, these two programs constitute one of the greatest expansions of the Federal Reserve's supervisory powers in recent history. But what is important to note, Mr. Speaker, is that, in addition to these mandated stress tests, banks conduct stress tests every single week on one asset class or another. It is important to know how banks can withstand tough, stormy financial weather, but this was taking place even prior to either DFAST or CCAR. What has happened now, Mr. Speaker, is these particular tests are incredibly onerous to the point where the reports are not just measured in pages, they are measured in pounds, and it is doubtful that anyone actually reads them. Then, to compound the challenge, Mr. Speaker, the Federal Reserve's stress tests have become kind of a cat-and-mouse exercise in which the Fed staff and compliance officers attempt to outwit each other in a game that has no rules and no transparency. In other words, it is a secret test. Nobody really knows what is on it. It is difficult for Congress, it is difficult for our markets, and it is difficult for the public to even assess whether or not these tests are effective. Mr. Speaker, it is very important to note, if you don't know what is on the test, how can you adhere to the rule of law if you don't know what the law is? And so something really needs to change here. Now, it is fortunate that yesterday the Federal Reserve finally took action to begin to simplify and refine the CCAR stress testing regime. Recognizing the opacity of the stress test regime, Federal Reserve Vice Chairman for Supervision Randy Quarles said in a statement: ``Our regulatory measures are most effective when they are as simple and transparent as possible.'' I couldn't agree more, as does the gentleman from New York as well. Unfortunately, Mr. Speaker, this particular proposal is somewhat modest in its attempt to simplify the process. It does follow the results of a review undertaken by former Fed Chair Yellen, which found a need to reduce the burden resulting from stress testing requirements. Almost everybody agrees with that, especially on our smaller financial institutions. So that is one more reason why this is needed. I am glad the Federal Reserve recognizes the need to reform the stress test regime because, again, it contributes to a climate of legal and regulatory uncertainty when the rule of law is so critical to the foundation of our society and it is so critical to economic growth. But in light of the Fed's announcement yesterday, it is also important to point out what the Fed did can easily be undone next week, next month, or next year. That is why it is critical that Congress has to make improvements in the stress testing regime permanent, especially for the CCAR process, which is not--I repeat, not--a creation of statute. The gentleman from New York (Mr. Zeldin) has come up again with just the right bill, H.R. 4293, and it will help provide a commonsense, and, oh, by the way, bipartisan reform that will inject badly needed accountability, transparency, and targeted relief to reduce legal and regulatory uncertainty for financial institutions. Why is this important, Mr. Speaker? At the end of the day, it is not really the banks that are the subject of these regulations. At the end of the day, it is their customers. And what this committee and what this House has to do is ensure that there is affordable and available credit to help fund people's American Dreams. I heard from a gentleman by the name of John in my district from Mesquite, Texas. He said: Credit helped me obtain my first home, and 13 years later, I am still in it. It has helped us grow from one child, when we moved in, to four. We ran into some bad times, but I was able to withstand it all with the help of the available credit lines that I had at the time. Without the credit, it would have been nearly impossible to still be where me and my family are today. That is why it is so important, Mr. Speaker. People need credit to pay their bills, to buy their homes, to pay for their car repairs; and all of these regulations, the regulatory onslaught that has been taking place for almost a decade, makes that credit less available and more expensive. It shrinks the American Dream, and we can't allow that to happen on our watch, Mr. Speaker. That is why it is so important that we bring some rationality to the stress test so that, hopefully, people like John in Mesquite can continue to get that line of credit. Mr. Speaker, that is why it is so important that we all vote for H.R. 4293 today. I reserve the balance of my time.

Mr. HENSARLING. Mr. Speaker, I yield 6 minutes to the gentleman from New York (Mr. Zeldin), who is a hardworking member of the House Financial Services Committee and the bill's sponsor.

Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentlewoman from Utah (Mrs. Love).

Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentlewoman from New York (Ms. Tenney), another hardworking member of the House Financial Services Committee.

Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from Kentucky (Mr. Barr), the chairman of our Financial Services Subcommittee on Monetary Policy and Trade.

Mr. HENSARLING. Mr. Speaker, may I inquire how much time I have remaining.

Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I listened very carefully to the distinguished ranking member, who observed that our banks have more capital today. And this is a good thing. To the extent that Dodd-Frank had anything to do with it, I would say congratulations to the Dodd-Frank Act. But I also noticed that, for many of us, many of our banks are still undercapitalized. And the ranking member had every opportunity to vote for the Financial CHOICE Act that would require 10 percent, far more capital than these banks that she is concerned about failing have today, but she rejected that. She often uses the phrase ``Wall Street megabanks,'' but it is her side of the aisle that supports a taxpayer bailout fund for what she calls the Wall Street megabanks. That comes from our friends on that side of the aisle, Mr. Speaker; not on this side. She says we have to bail out these banks. No, we don't have to. We don't have to. We should support bankruptcy over bailout. And we should support high levels of capital over incredibly intrusive Federal control, Federal control that ultimately gets resolved into less credit and more expensive credit for many of our constituents. Again, Mr. Speaker, I would add, banks have stress-tested themselves long before the appearance of Dodd-Frank. Long before the appearance of Dodd-Frank. In fact, stress tests are taking place on some group of assets at every bank in America every day. Many, many banks, particularly the larger banks, may do up to 200 stress tests a week. What the gentleman from New York is trying to do is add some level of clarity, sanity, and reasonableness to the federally instituted CCAR process, something that can take literally 40,000 pages--40,000 pages-- can take tens of millions, if not over $100 million, to produce that could have been used to loan to our constituents to buy their home, to repair their car, to put groceries on the table, to pay for their healthcare premiums. And some say, well, these tests have to be conducted semiannually. Why semiannually? What is wrong with annually? What is sacrosanct about semiannually? And, oh, by the way, why are we testing for both worst- case scenario and some mid- scenario? Okay. Either you are going to survive the 100-year flood or you are not. If you can survive the 100-year flood, surely you can survive the 50-year flood. So why do we need that other test? I mean, what we hear from our friends on the other side of aisle: Oh, my God, we can't question the Federal regulators. I mean, they come from Mount Olympus. They have this great wisdom that we can never challenge them. Well, the truth is we are Article I of the Constitution, and we are the ones who make the law, and that is why we have hearings, and we listen very closely. We listen closely to our regulators; we listen closely to our constituents; we listen closely to market participants; and then we make judgments. We make judgments. So, yes, there is a balance. There is a balance between economic opportunity and financial stability. We want there to be strong financial stability, but we also want there to be strong, strong economic opportunity for all of our constituents. Mr. Speaker, I reserve the balance of my time.

Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from Georgia (Mr. David Scott), the Democratic cosponsor of this legislation and a proud member of the Financial Services Committee.

Mr. HENSARLING. Mr. Speaker, may I ask how much time I have left.

Mr. HENSARLING. Mr. Speaker, I yield an additional 30 seconds to the gentleman.

Mr. HENSARLING. Mr. Speaker, I yield 3 minutes t the gentleman from Pennsylvania (Mr. Rothfus), who served as our vice chairman of the Financial Services Subcommittee on Financial Institutions and Consumer Credit.

Mr. HENSARLING. Mr. Speaker, I yield myself the balance of my time. Well, the ranking member poses the question, ``Why?'' I can tell you why, Mr. Speaker. It is because Therese from Waco has written: I would like to express my disappointment at being rejected for a home loan, which would cost less than the house I presently have been renting for 5 years. As a small-business owner, I run my design studio out of my home office and take every tax break that is legal to offset the taxes payable if I didn't. We do it for Sherry from Eustace, who writes: After a divorce 4 years ago, I needed to buy a car because my car was over 10 years old. I have a checking account in my name, I have a savings account, but they did not loan me money. There is an onslaught of financial regulations that is costly, intrusive, burdensome, and is causing credit to be less available--less available--to the people who need it. That is why we do this, Mr. Speaker, week after week after week. We do it to make sure that our constituents can buy homes, that they can have cars. If they have tough times, if they lose a job, if they go through a painful divorce, that is why we do it, Mr. Speaker. Again, stress-tests are important. That is why banks do it themselves every single week. But the question is: How do we calibrate this? We have used the ranking member's prescription, and that of my friends on the other side of the aisle, and it brought us 1.6 percent economic growth. Thankfully, today, with a new Congress and with a new President, we have 3 percent economic growth, and all types of opportunities are coming. We should not listen and go back to those days. It is time to go forward to a better America with greater opportunity for all Americans. That means we have to reform the stress test to ensure that not only do we have financial stability, but we have financial opportunity as well. That is the work of the gentleman from New York. Mr. Speaker, I urge everyone to support H.R. 4293, the Stress Test Improvement Act of 2017, and I yield back the balance of my time.

Mr. HENSARLING. Mr. Speaker, I claim the time in opposition.

Mr. HENSARLING. Mr. Speaker, as the ranking member talks about the hundreds of millions of dollars of fines that these banks have paid, who have violated provisions of civil law, maybe that means the system is working. That is what ought to happen to wrongdoers. There ought to be fines. No one can defend what happened at Wells Fargo. I hope that the current management team is cleaning up what has been a mess and what has harmed consumers for many, many years under the previous team. But I do know this: that Wells Fargo has been fined almost a half a billion dollars already. Their former CEO had $75 million clawed back in compensation. They lost $29 billion of market value--their investors--and investigations are ongoing, as it well should be. But I would point out that our prudential regulators continue to have full authority to enforce all of our consumer protection laws: the Alternative Mortgage Transaction Parity Act, the Consumer Leasing Act, the Electronic Fund Transfer Act, the Equal Credit Opportunity Act, and the Fair Credit Billing Act. When they find violations, people are fined, as they well should be. But what we are talking about, once again, is trying to create economic opportunity for all those who need it, to make credit more available and less expensive for people who are trying to buy a home, repair a car, and put groceries on the table. What the gentleman from New York is saying, again, when it comes to a federally imposed stress test, after hours and hours of testimony, we believe that maybe that test ought to be administered annually, instead of semiannually. That would be a better balance. That is what is happening from the gentleman from New York. What the ranking member's motion to recommit would do is simply water that down when all of our consumer protection laws remain fully in effect. They are working. Mr. Speaker, I urge rejection of the motion to recommit, I urge adoption of H.R. 4293, the Stress Test Improvement Act, from Mr. Zeldin from New York. Mr. Speaker, I yield back the balance of my time

Mr. HENSARLING

Mr. HENSARLING. Mr. Speaker, on that I demand the yeas and nays.

Mr. HENSARLING

Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 780, I call up the bill (H.R. 4061) to amend the Financial Stability Act of 2010 to improve the transparency of the Financial Stability Oversight Council, to improve the SIFI designation process, and for other purposes, and ask for its immediate consideration in the House.

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.

Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise today in support of H.R. 4061, the Financial Stability Oversight Council Improvement Act of 2017. I want to commend two friends, Mr. Ross from Florida on the Republican side of the aisle and Mr. Delaney on the Democrat side of the aisle, for their collective leadership on bringing forth this truly bipartisan bill, a strong, bipartisan bill, which has 58 different cosponsors, half from each side of the aisle. Before talking a bit about the bill, there has been a lot of news today, Mr. Speaker. Part of the news, that I just could not overlook, is the fact that my dear friend and colleague from Florida announced that he would be retiring at the end of this Congress. I do want to say what a pleasure and honor it has been to work with the gentleman from Florida. I have appreciated his leadership, I have appreciated his knowledge, and I have appreciated his calm demeanor and his ability to further strong, bipartisan measures that will help create greater credit opportunities for hardworking Americans. I would say I will miss him, but I will be gone as well. Maybe he will invite me down to the Florida coast for some deep sea fishing. I look forward to receiving that invitation at the appropriate time. Now back to business, Mr. Speaker. The Financial Stability Oversight Council is charged with identifying emerging threats to our financial stability. However, during the previous administration, the FSOC, as it is called, went far beyond identifying this risk and, instead, just concocted incredibly irrational speculative scenarios about sectors of the financial markets that had nothing to do with the financial crisis. In turn, they have caused more harm to the financial system than added stability. It bears highlighting at the outset that this bill does not strip the FSOC of its ability to designate a nonbank financial company as a SIFI, or systematically important financial institution. Frankly, Mr. Speaker, it would be a better bill if it did. It also wouldn't be a bipartisan bill. That is not what this bill is trying to do. Rather, this bill simply brings needed transparency and accountability to the designation process. Mr. Ross and Mr. Delaney, in H.R. 4061, do this by reversing the presumption that government bureaucrats should dictate the business models and operational objectives of private businesses in requiring the FSOC to approach the potential designation of a nonbank by encouraging companies to address the risk prior to designating them as SIFIs in order to actually reduce systemic risk. Let me sum it up, Mr. Speaker. All this is saying is that a nonbank financial institution that the Financial Stability Oversight Council feels may be creating undue risk in the system, give them an opportunity to remedy that before you designate them as a too-big-to- fail institution backed up with a taxpayer bailout fund. At least give them an opportunity to remedy the risk that you are concerned about. What could be more common sense? What could be more reasonable? That is why it is such a strong, bipartisan bill coming out of the House Financial Services Committee. Specifically, Mr. Speaker, applying bank-like regulation to nonbanks, such as asset managers, broker-dealers, insurance companies, and private investment funds just doesn't make sense. Nonbanks do not have access to the deposit insurance fund, they don't have access to the Federal Reserve's discount window or lending facilities. Nonbanks take far larger capital haircuts on the assets they hold. Nonbanks, when they fail, fail very differently from banks. If an individual mutual fund were to fail, the shareholders of that fund would bear the losses, not the taxpayer. There is no reason to apply the same system to them. So the bill would bring, again, clarity and accountability to the FSOC designation process. That should be self-evident. To date, the FSOC has designated four nonbank financial companies as systemically important financial institutions. Today, only one remains designated and it is unclear for exactly how long. The de-designation of these companies seems to point to a recognition that these companies do not present a potential risk that FSOC first claimed that they did. MetLife, one of them, actually challenged FSOC's SIFI determination in court, and FSOC's designation was found by an Article III judge to be fatally flawed, arbitrary and capricious, and a critical departure from FSOC's own standards. Based on that case alone, it certainly seems appropriate for Congress to ensure there are proper guardrails put in place in this designation, because at the end of the day, the designation doesn't just affect, again, Wall Street, it is felt directly by Main Street households who are trying to save for college, save for retirement. They would see their costs rise and their investment returns fall on a mutual fund if it was designated, simply because investors would be required to bail out other too-big-to-fail firms. So this is a common sense piece of legislation, it is strongly bipartisan, and I urge all Members to support it. Mr. Speaker, I reserve the balance of my time.

Mr. HENSARLING. Mr. Speaker, I yield myself 10 seconds just to say as the jihad against banks continues, if you read the bill, it doesn't have to do with banks, it has to do with nonbanks. And the apocalyptic vision that is described by the ranking member is supported by a majority of Democrats on the committee. Mr. Speaker, I yield 5 minutes to the gentleman from Florida (Mr. Ross), who serves as the vice chairman of our Subcommittee on Housing and Insurance and is the Republican sponsor of this piece of legislation.

Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from Michigan (Mr. Huizenga), who serves as the chairman of our Capital Markets, Securities, and Investments Subcommittee.