Jeb Hensarling

Mr. HENSARLING

Mr. HENSARLING. I yield the gentleman from Michigan an additional 30 seconds.

Mr. HENSARLING. Mr. Speaker, I yield 2-1/2 minutes to the gentleman from Maryland (Mr. Delaney), the lead Democratic cosponsor of the legislation and a hardworking member of the Financial Services Committee.

Mr. HENSARLING. I yield the gentleman from Maryland an additional 30 seconds.

Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from Illinois (Mr. Hultgren), who serves as the vice chairman of our Capital Markets, Securities, and Investment Subcommittee.

Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from Colorado (Mr. Tipton), who serves as the vice chairman of our Subcommittee on Oversight and Investigations.

Mr. HENSARLING. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from California (Mr. Sherman), one of the Democrat cosponsors of the legislation.

Mr. HENSARLING. Mr. Speaker, I yield myself 5 seconds just to say I take note that the ranking member respects her Democrat Members who disagree with her, but, apparently, not enough to yield them any of her time. Mr. Speaker, I am pleased to yield 2\1/2\ minutes to the gentleman from North Carolina (Mr. Budd), yet another hardworking member of the Financial Services Committee.

Mr. HENSARLING. Mr. Speaker, I believe I have the right to close. I have no further speakers, so I reserve the balance of my time.

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, why is this important, and what does this bill do? Let me try to make it very succinct. Dodd-Frank gave the Federal Government the power to designate firms to be too big to fail and backed them up with a taxpayer fund, a bailout fund. We think that is wrong. But that is not what this bill does. The bill doesn't repeal the bailout fund. It simply says to nonbanks--not banks, nonbanks--mutual funds, insurance companies: You know what? Before we knock you upside the head with a sledgehammer, we are going to give you a chance to get your act together. That is essentially what this bill does. And why is that important? It is important because we have people who are trying to capitalize small businesses. It is important because we have people who are trying to save for their retirement. Enhanced prudential standards, which is the legal term of art for coming down with a ton of bricks onto a company, that can cost people. In fact, it has been estimated that these enhanced prudential capital requirements imposed with a SIFI designation, a too-big-to-fail designation on a mutual fund, could trim as much as 25 percent or $108,000 for a mutual fund investor's returns over a lifetime of investing. That comes out of the pockets of our seniors. That is why this is so important. Contrary to what you hear on the other side of the aisle, the FSOC, the Financial Stability Oversight Council, will still have full ability to designate an institution as too big to fail. But it says: You know what? Before you do that, consider some other methods: consider seniors, consider small businesses, and consider the impact of what you are going to do. Look at what happened to GE Capital. This was one of the great financing companies in America, and they were basically a coyote in a trap that had to chew its leg off. There is hardly anything left of them. They used to fund furniture retailers, bread bakeries, Jack in the Box franchises. They provided credit to startups all over America, $31 billion in 2010 to 1.2 million small and midsized businesses, and now, next to nothing. Next to nothing, because they were designated as a nonbank SIFI. The ranking member brings up AIG, but guess what? AIG was regulated by a Federal regulator who had full ability to stop anything they were doing for safety and soundness. And guess what? The regulator, in which many on the other side of the aisle put total faith into, they missed it. They screwed up. They said under oath in our committee: Yeah, we had full authority to stop it, and we just missed it. We just missed it. So it is time, Mr. Speaker, that we improve this Financial Stability Oversight Council. I urge all Members to support H.R. 4061. Mr. Speaker, I yield back the balance of my time.

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

Mr. HENSARLING

Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 787, I call up the bill (H.R. 4566) to amend the Dodd-Frank Wall Street Reform and Consumer Protection Act to provide relief to nonbanks from certain stress test requirements under such Act, and ask for its immediate consideration in the House.

Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and to include 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. 4566, the Alleviating Stress Test Burdens to Help Investors Act. Mr. Speaker, I especially want to thank the gentleman from Maine (Mr. Poliquin), one of the most hardworking, enthusiastic, cheerful members of the House Financial Services Committee for all the work that he has done to advance this very strong piece of bipartisan legislation, which, incidentally, passed the Financial Services Committee again with another strong bipartisan vote of 47-8. Now, the financial crisis led to questions, both domestically and internationally, about how to address financial stability and create a regulatory framework to mitigate systemic risk, all the while ensuring robust economic growth. At the heart of this bill of the gentleman from Maine is a recognition that our economy can suffer when we get it wrong, when government attempts to dictate the business models and operational objectives of so many of our businesses. It is also a recognition that one-size-fits-all regulations can stifle economic growth and ultimately harm consumers and harm our constituents. Current bank-centric standards and assessments to nonbank industries, such as the asset management industry, have needlessly saddled Main Street investors with increased costs while they are trying to save for college or retirement or some other important need, and this is perhaps no clearer than in this stress testing regime. As a former SEC chief economist observed in 2016, who said that, in the current law, ``stress test the big banks; and, oh, you might as well go ahead and do the asset management companies.'' That is his take of what the law says. In other words, asset management firms that, again, our constituents depend upon for their retirement security or for their financial planning are now subject to bank regulations simply because they operate under the financial services umbrella, even though such firms plainly have legal, structural, and operational characteristics that make them very, very different from banks. By the way, none of the asset managers had anything to do with the financial crisis that brought about the legislation that we are debating in the first place. For example, unlike banks, asset managers do not have access to the deposit insurance fund or the Fed's discount window. If that is not enough for you, Mr. Speaker, here is more. Asset managers are legally separated--legally separated from the funds they manage, meaning that the asset and liabilities of the manager are distinct from the assets and liabilities of the funds. On the other hand, the bank business model directly subjects the bank to the risks and obligations of its assets and liabilities. Again, applying a one-size-fits-all regulatory structure--in this case, a bank-centric model--is not only bad for the asset management industry, but, far more importantly, for our constituents that they serve, who choose to save and invest. Registered funds are the investment vehicle choices for millions of Americans seeking to buy a home, pay for college, plan for financial security and retirement. Application of unnecessary, ill-suited, bank- centric stress testing requirements to register funds and advisers will undoubtedly increase cost for these funds and advisers, and, ultimately, this gets passed on to investors without any corresponding benefits that we can discern. The recent asset management and insurance report issued by the Department of Treasury confirms these concerns. The bill of the gentleman from Maine (Mr. Poliquin) would fix this unequal regulatory structure by exempting certain nonbank financial institutions that have not been designated for supervision by the Federal Reserve Board from the act's stress testing requirement. Further, in the true spirit of bipartisanship, I want to thank the gentlewoman from New York (Mrs. Carolyn B. Maloney) for recognizing the underlying need for this relief and for working with Mr. Poliquin to offer an amendment during markup that allows the SEC and the CFTC to issue regulations to require certain financial companies they supervise to conduct periodic analysis of the financial condition of such companies under adverse economic conditions. The approach is common sense. It is not one size fits all. It recognizes that the primary regulator of nonbank financial companies is better suited than a bank regulator to determine whether these stress tests might be useful to address risk. And it recognizes that, as a general matter, stress testing asset managers is difficult and often needless. Mr. Speaker, I urge all of my colleagues to support this great bipartisan legislation. I believe we have an amendment forthcoming from the ranking member, which I expect our side of the aisle to support. I am led to believe that, with the adoption of her amendment, she would support the underlying bill. I hope that proves to come to fruition, in which case we can have a very strong bipartisan vote on this bill. Mr. Speaker, I reserve the balance of my time.

Mr. HENSARLING. Mr. Speaker, I yield 6 minutes to the gentleman from Maine (Mr. Poliquin), who is the sponsor of this legislation.

Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from North Carolina (Mr. McHenry), who is the vice chairman of our Financial Services Committee and the chief deputy majority whip.

Mr. HENSARLING. Mr. Speaker, I am just amazed that anybody from North Carolina, after being beaten by Texas A&M by 21 points, would make any allusion to basketball whatsoever. I trust our next speaker will not make that mistake. Mr. Speaker, I yield 3 minutes to the gentleman from Missouri (Mr. Luetkemeyer), who is the chairman of the Financial Services Subcommittee on Financial Institutions and Consumer Credit.

Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from Illinois (Mr. Hultgren), who is the vice chairman of the Financial Services Subcommittee on Capital Markets, Securities, and Investments.

Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Williams), who is the vice chairman of the Financial Services Subcommittee on Monetary Policy and Trade.

Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from Tennessee (Mr. Kustoff), who is a hardworking member of the Financial Services Committee.

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

Mr. HENSARLING. Mr. Speaker, I yield myself the balance of my time. Mr. Speaker, once again, I want to encourage all of my colleagues to support H.R. 4566, the legislation from the gentleman from Maine. I want to commend him once again. He is one of our most hardworking members on the committee, and he cares passionately about his constituents in Maine. I also want to commend him for once again working on a very bipartisan basis. He has managed to change his bill from its original concept many times to try to garner more support from the other side of the aisle. With the acceptance of the ranking member's amendment, again, I am hopeful that we will have a very, very strong vote in the House. Again, this came out of committee with a very strong bipartisan vote of 47-8. Mr. Speaker, very often we debate regulation. I think that now, fortunately, we have a 3 percent growth Tax Code which has been passed by Congress, but, unfortunately, I do not believe we have a 3 percent growth of finance in the banking system. That is important. It is important to our constituents who still need credit to buy that first home, a factory worker who needs to get their transmission repaired so that they can go to work, some parent trying to send a kid to college, or people trying to plan for their retirement. Too often, I think we have a dichotomy between regulation and deregulation, when the real dichotomy is between smart regulation and dumb regulation. It is always incumbent upon us in Congress to look very carefully at these regulations. Sometimes they look very good on the chalkboard, but in reality, they don't quite render the results or benefits that we had hoped for. So we always have to take a look at what this is doing not just to consumer and investor protection, but what it is doing to economic growth as well. I agree with the ranking member. Stress testing is a good concept. It is one of the reasons why banks and other financial firms typically stress-test themselves daily, weekly, monthly, annually. What doesn't make sense, though, is that there be no recognition to the cost that it imposes, as the gentleman from Missouri, the chairman of our Financial Institutions and Consumer Credit Subcommittee, was very articulate in reminding us that these submissions can cost us millions and millions of dollars. The reports are not measured in pages; they are measured by the pound. There can be 10- and 20-pound submissions of paper that we wonder if anybody ever reads. But what especially doesn't make sense is trying to apply a bank stress test to a nonbank financial institution, particularly an asset manager. I know the ranking member was talking a little bit earlier about using an analogy to auto inspections: It makes no sense to have the home inspectors inspect your auto; it makes no sense to have the auto inspectors inspect your home. The gentleman from Maine is ensuring that whatever stress test is applied, it is applied properly to the business model that needs to be tested for its potential stress of our financial system. So, again, I just want to commend the gentleman from Maine for his hard work, and I urge all Members to vote in favor of H.R. 4566 because, indeed, maybe it is not a catchy title, but it is an accurate title. As we alleviate stress test burdens, we do help investors. Mr. Speaker, I yield back the balance of my time.

Mr. HENSARLING. Mr. Speaker, I ask unanimous consent to claim the time in opposition to the amendment, although I am not opposed.

Mr. HENSARLING. Mr. Speaker, I am not thrilled with the amendment, but in the spirit of compromise and the spirit of bipartisanship, we have worked with the ranking member and the sponsor of the legislation. It wouldn't be my preferred approach, but that is often what we do around here. I want to thank the ranking member for working with the majority side in order to advance this, again, as a very strong bipartisan vote in the House, which I hope and anticipate with the inclusion of this amendment. I would point out, Mr. Speaker, again, I am very happy. On the other side of the Capitol, they have recently advanced a number of kind of smart regulatory measures and capital formation measures. We look forward to negotiating with our friends in the Senate. I am hoping that an overwhelming vote on a bill like H.R. 4566 is one that could be in a final package before it goes to the President's desk. Again, I still think that, although we have all compromised a little something here, I think we all advance our principles. I think it is something that will help, actually, both financial stability and investor protection, including protecting their opportunities to have a better future. So again, I want to thank the ranking member for working with us, and I would urge the House to adopt her amendment and adopt H.R. 4566 by Mr. Poliquin of Maine. Mr. Speaker, I yield to the gentleman from Maine (Mr. Poliquin).

Mr. HENSARLING. Mr. Speaker, I yield back the balance of my time.