Maxine Waters

Ms. MAXINE WATERS of California

Ms. MAXINE WATERS of California. Mr. Speaker, this is the final amendment to the bill which will not kill the bill or send it back to committee. If adopted, the bill will immediately proceed to final passage, as amended. We have talked at length today about how H.R. 4296 is a bill for Wall Street megabanks, and I deeply disagree with the bill's approach. So I offer this motion to recommit not in a manner that sends the bill to the committee and kills the bill, but, rather, to attempt to improve the bill before the House votes on final passage of the measure. Let's discuss the elephant in the room. We all know megabanks have been given a free ride in Washington for far too long. During the savings and loan crisis, the government had no problem throwing bankers in jail for breaking the law. Over 1,000 bank executives were prosecuted. But now megabanks just get a fine, a slap on the wrist, for harming consumers. Since 2010, megabanks have racked up over $160 billion worth of fines, yet they keep breaking the law. We have talked about Wells Fargo's growing list of illegal actions that have harmed millions of consumers. Sure they have been fined, but these fines are just the cost of doing business. This soft enforcement approach is just increasing their operational risk and losses, which, at the end of the day, will impact not only all of their customers, but the broader economy as well. I hope Republicans and Democrats can all agree that any megabank that engages in a pattern or practice of unsafe or unsound banking practices and other egregious violations that has resulted in profound consumer harm in the last 10 years is not entitled to any benefit of regulatory relief provided under this bill. So my amendment excludes a megabank like Wells Fargo that has fraudulently opened millions of accounts without their customers' consent, enrolled consumers in life insurance policies without their consent, and forced nearly 1 million Americans to purchase automobile insurance that they didn't even need. Since 2016, I have been calling for Wells Fargo to face real penalties. Last year, I introduced H.R. 3937, the Megabank Accountability and Consequences Act, to compel the Federal bank regulators to fully utilize existing authorities to stop these megabanks from repeatedly flouting the law and harming millions of consumers. So I was glad to see Janet Yellen on her last day at the Federal Reserve take bold action to cap the bank's size until it cleans up its act. I am talking about Wells Fargo. This is what Janet Yellen did on her last day at the Federal Reserve. But we must do more to send a strong message to all megabanks that there will be real consequences for their bad actions that mislead, abuse, or deceive its customers. H.R. 4296, in its current form, would send the opposite message to recidivist megabanks. They should not reap the profit of easier operational capital requirements while their operational breakdowns are only increasing. Mr. Speaker, I urge my colleagues to adopt this motion to recommit so that we do not reward a recidivist megabank like Wells Fargo for repeated operational failures that ripped off millions of consumers. Mr. Speaker, I yield back the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, I have a motion to recommit at the desk.

Ms. MAXINE WATERS of California. Mr. Speaker, early in my statement, I warned that there would be someone who would come on the floor and claim that it was going to hurt community banks, small town banks; and this bill has nothing to do with community banks or small town banks. This is about megabanks. This is about SIFIs. This is about the banks that can cause harm in the whole system. This is about those banks that we must be concerned about because of the displacement that they can cause, not only in this country, but internationally. Mr. Speaker, I just remind you again this has nothing to do with community banks. This has nothing to do with small town banks. This is just the big banks that are significantly important banks. Mr. Speaker, I reserve the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself the balance of my time. Mr. Speaker, let's put aside the complex terminology we often use with Financial Services legislation and call this bill what it really is: a short-sighted giveaway to Wall Street megabanks. Approximately ten banks we are talking about, the very largest banks in our Nation, have to abide by operational risk standards under an enhanced framework. They are required to maintain this additional capital so when they continue to engage in risky behavior, like opening millions of fake accounts to drive up profits, they will not immediately become insolvent, sparking a financial crisis. And may I just stop here for a moment and say: it is odd that, given the information that we have discovered about some of our megabanks, particularly Wells Fargo, that was involved not only in creating fake accounts, false accounts in their clients' names, but also selling them basically insurance that they did not need, I am wondering why my friends on the opposite side of the aisle are not more concerned about this operational risk that they take. For example, when we talk about operational risk, include in that the fines, the fines that we have placed on Wells Fargo and other banks that have been caught committing fraud on its clients. It seems to me that this would be taken into consideration, and I don't think they are going to stop. We have gone through a crisis. In 2008, we had this meltdown. We had a recession, almost a depression. We had to bail out all of these banks, yet we have Members, particularly on the opposite side of the aisle, who are doing everything that they can to go back to some of the practices that will cause us to be in the same situation we found ourselves in in 2008. So I would just simply say that this attempt to basically say: don't look at our past, no matter how bad we have been, no matter how many fines have been placed on them, forget about that. We don't like that. So in saying that, what they are basically saying is they are going to create more risk and they are going to put banks in the position of possibly failing. So with that, I would just like us not to forget that our current operational risk capital standards didn't come out of nowhere. They are still recovering from the 2007 to 2009 financial crisis, which was largely caused by unsafe practices by large internationally active megabanks and inadequate regulation that ignored past misconduct and risky activities. The crisis stripped wealth from millions of American families and destroyed the economy. Since we passed the Dodd-Frank Act and the regulators have implemented standards from the international Basel III accord, including our operational risk capital rules, we have made tremendous progress to create a better capitalized and more stable banking system, and this is bearing results. Megabanks have experienced record-breaking profits for the past several years. Now they expect us to believe that these commonsense rules that take into account their previous behavior was keeping them from providing more affordable credit to hardworking consumers in search of the American Dream? As I mentioned earlier, a bank can still make loans to credit-worthy consumers while funding those loans with capital instead of debt. Operational capital is not cash locked away at night, but, rather, it is the value of a bank's assets minus its liabilities or debts. A well- capitalized bank that has adequate sources of funding can accommodate losses without reducing its lending. In fact, it would be able to lend in good times and in bad. We should direct the regulators overseeing megabanks like Wells Fargo with its years of numerous consumer abuses and JPMorgan Chase with its London Whale trading scandal not to ignore these past failures and put our constituents at risk. My colleagues on the other side of the aisle are rushing through deregulatory measures to help their friends on Wall Street. But Congress must not forget that it was hardworking consumers across the country who paid dearly for Wall Street's faults in the last financial crisis. So I would urge Members to vote ``no'' on this bill. I am very pleased that while my colleagues on the opposite side of the aisle keep talking about this being a bipartisan bill and they mention Mr. Meeks' name from New York, et cetera, we have the support of the Congressional Progressive Caucus and the Congressional Black Caucus in opposition to this bill. Mr. Speaker, I yield back the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield as much time as she may consume to the gentlewoman from Ohio (Mrs. Beatty), a member of the Financial Services Committee.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise in strong opposition to H.R. 4296. This bill is simply another rollback of rules put in place after the financial crisis. It would undermine the stability of our country's largest financial banks by restricting the way regulators set capital requirements for these institutions. Before I get into why this bill is problematic, let me take a moment to clarify what capital is and what it is not. Some have said that capital is money that is held on the side or in reserve and cannot be used to lend to borrowers. This couldn't be further from the truth. Capital is not a reserve. Capital refers to the terms of the financing a bank receives. In the most simplistic example, a bank receives funds from customers making deposits, loans it receives from other institutions, and stock it has issued to investors. The bank uses all of these sources of funding to make mortgages and other loans to customers. However, there are important differences. Bank debt has terms like regular interest payments that, if it stops paying, the bank fails. However, a bank can stop paying dividends on a stock without it failing. Banks funded with lots of debt are described as being higher leveraged and risky because only a small drop in the value of their mortgages and other assets can cause them to default. Funding a bank through higher levels of capital makes the bank stronger, because even if the loans it has made lose value, the bank can avoid default by temporarily halting payments to their investors or lowering the value of the stock. H.R. 4296 would impact something called operational risk capital, which is the capital used to cover the possibility of losses to the largest banks caused from their operational failures, such as rogue traders, fraudulent sales practices, and cyber breaches. H.R. 4296 would diminish this type of capital, which only about 10 megabanks are required to maintain under an enhanced framework, by restricting the information that regulators can use to determine the appropriate balance of safe funding, like bank stock versus debt, that megabanks should have to address potential operational losses that may occur. The bill would direct regulators to primarily consider a megabank's current activities and not their past behavior when setting the capital level, thereby enabling the bank to take on more debt. According to Americans for Financial Reform, a nonpartisan coalition of more than 200 civil rights, consumer, labor, business, investor, faith-based, and civic and community groups: ``While current activities are obviously central to operational risk, and are already treated as such, the recent loss experience of banks is the best concrete evidence regulators usually have as to the magnitude of current and future risks. Recent past activities are also vital to understanding the future exposures of the bank, including potential legal exposures.'' Thus, this change to how regulators determine the appropriate amount megabanks should maintain for operational risk is imprudent. A megabank's past actions are often the best indicators of future potential risks that it may experience. Well, memories seem to quickly fade in Congress about the problems that led to the last financial crisis, so let me list some of the examples of past megabanks' operational failures by J.P. Morgan's ``London Whale'' trades and Wells Fargo's long list of violations that have ripped off millions of consumers, including those harmed by their fraudulent accounts scandal. Given these examples of past misconduct, the megabanks have collectively paid more than $160 billion in fines since 2010. It is absurd to suggest that their past behavior shouldn't be taken into account when determining how much capital they should hold. Even the Basel Committee, which several of President Trump's appointees now serve on, agreed in December, when they finalized Basel III reforms from where the operational risk capital originates, writing: ``Banks which have experienced greater operational risk losses historically are assumed to be more likely to experience operational risk losses in the future.'' So it makes no sense to have a forward-looking assessment that deemphasizes a megabank's past failures in setting these capital requirements. It is almost as if this bill is saying: ``Don't pay any attention to that. No matter how bad they have been, don't look at their past performance. We don't want you to look at that, because we know if you do, you will make a different decision about capital requirements.'' The nonpartisan Congressional Budget Office estimated that the bill's changes would cost the Federal Government $22 million. This calculation was based on the fact that the capital change would not only affect the bank's probability of failure, but also the magnitude of future losses to our entire financial stability, which, in turn, affects the overall U.S. economy. This is not a bill to help community banks. It has nothing to do with community banks. Let me repeat that. This is not a bill to help community banks, so what we wish we would not hear is someone coming up talking about how it is going to hurt community banks. That is often used as an excuse. When we are trying to rein in these megabanks, they always lop in the community banks with it. This has nothing to do with community banks. This is a bill for the 10 largest banks in this country. So the megabanks on Wall Street are hoping Congress will let them take on riskier debt by directing the regulators to downplay, if not outright ignore, their recent and extensive operational failures. Mr. Jamie Dimon, the CEO and chairman of JPMorgan Chase, wrote in his 2016 annual letter to shareholders that: ``Operational risk capital should be significantly modified, if not eliminated.'' Let's think about it like this: most adult consumers in this country have a credit score. Banks use those credit scores to determine whether or not to lend to a consumer and, if so, under what terms. These credit scores are based on a consumer's what? A consumer's past payment history, because this information is considered one of the best indicators of a person's likelihood to default on future credit obligations. Now, we all know that credit scores are problematic, but no one, including me, is proposing to get rid of them, because we can all agree that past payment information is a good indicator of how someone will handle credit in the future, but this bill takes that principle and throws it out the window when it comes to the 10 largest banks in this country. Keep in mind, these same banks will continue to use a consumer's credit score for underwriting and rating of mortgages and other consumer loans, but the megabanks themselves are asking this Congress not to judge them on their past behavior, as they judge consumers, and to let them have a clean slate moving forward. If that isn't a double standard, Mr. Speaker, I am not sure what is. Mr. Speaker, bank profits reached an all-time record high in 2016. Compensation for Wall Street CEOs has shot back up to levels last seen in 2006, and business lending is up 75 percent since 2010. All this happened while U.S. banks added more than $700 billion in capital to absorb potential losses. There is a simple reason for this: healthy banks lend. U.S. banks also lent significantly more than their European counterparts, because our banks boosted their capital levels, while the European banks did not. So despite Republicans' ``Chicken Little'' arguments about the dire consequences of the Dodd-Frank Act and related regulatory reforms, the data speaks for itself. Banks are making more money than ever and lending more than ever, but apparently that is not enough. So I am here again today appealing for Congress to continue to uphold the commonsense safeguards for consumers, the broader economy, and the megabanks. I reject this Wall Street giveaway. Mr. Speaker, I urge my colleagues to oppose this harmful legislation, and I reserve the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield 2 minutes to the gentlewoman from Ohio (Mrs. Beatty). She has raised a question about the analogies that the chairman made, and those analogies seem to escape ordinary logic.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such time as I may consume. In addition to the concerns I have raised about this bill, I also want to mention a change to H.R. 4296 made in the Rules Committee just last night. Because H.R. 4296 makes the 10 largest banks more likely to fail, the nonpartisan Congressional Budget Office determined that there was a higher likelihood that taxpayer funds would be used to wind down a megabank. To offset these costs, Republicans have taken funds from the Federal Reserve's surplus account. So what is the Fed's capital surplus account? Effectively, it is a rainy-day fund intended to ensure adequate capital is available to absorb possible losses. Several stakeholders have raised concerns that, by reducing the Fed's surplus account, Congress could negatively affect the Federal Reserve's independence in monetary policy decisionmaking by rendering it dependent on Treasury for recapitalization in the event that total Reserve bank capital is depleted. Put simply, this bill not only makes the 10 largest banks more likely to fail, but it also makes it more likely that the Federal Reserve will be unable to address problems in the financial system going forward. I would like to also mention that, in a letter opposing this bill, the Center for American Progress highlighted, again, several budgetary considerations we should keep in mind as we debate this bill. And, of course, I have either mentioned or alluded to it, but it is important that we understand that the Center for American Progress is very concerned, and the CBO also projects, that H.R. 4296 will increase the deficit due to an increase in expected losses to the Federal Government stemming from an increase in the likelihood of another financial crisis. The bill would pay for these costs by lowering the Federal Reserve System's surplus funds, once again treating the Fed like a piggy bank and shifting privately generated losses to the public. Mr. Speaker, I reserve the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield such time as she may consume to the gentlewoman from Hawaii (Ms. Gabbard), a member of the Congressional Progressive Caucus.

Ms. MAXINE WATERS of California. Mr. Speaker, may I inquire as to how much time I have remaining?

Ms. MAXINE WATERS of California

Ms. MAXINE WATERS of California. Madam Speaker, I yield myself such time as I may consume. Madam Speaker, given the extreme volatility in the stock markets over the past few weeks, I am particularly troubled by title II of this bill, which would make it easier for high-frequency traders to evade regulatory oversight of their potentially disruptive automated trading algorithms. This provision is widely opposed by nonpartisan consumer and investor advocacy groups who recognize the impact automated trading has on our markets. Let me read for you excerpts from a few letters from these groups that highlight the dangers of title 2. Americans for Financial Reform--a coalition of more than 200 consumer, civil rights, investor, retiree community, labor, faith- based, and business groups--wrote: ``Title II would prevent regulators from inspecting not only their raw source code used in automated trading, but also any related intellectual property that `forms the basis for the design of' source code. Examination of such intellectual property would only be possible in an enforcement context pursuant to a subpoena. This implies that the SEC would have to wait until the damage was done through a `flash crash' or similar market disruption before taking any action, which would have to be retrospective. ``In light of the significance of automated trading to modern markets, and the potential risk of high-frequency trading, it makes no sense to tie the hands of regulators in examining detailed trading strategies and methods of high frequency traders.'' The Center for American Progress cautioned that: ``But in an era of fast-moving, `flash-crash'-prone markets, the SEC may have a wide range of regulatory reasons for why it may need to examine source codes, including approvals of new trading products or the supervision of trading venues. The SEC should only exercise that authority carefully and under the strictest protections for confidential information, but blocking it by law dangerously limits the SEC's ability to address the significant technology-based challenges to financial markets.'' The Consumer Federation of America, an association of nearly 300 consumer advocacy groups, similarly opposed title 2 because it ``would weaken SEC oversight of algorithmic trading and hamstring the agency from responding quickly to flash crashes or other market breakdowns.'' Further, the CFA wrote that: ``At a time when algorithmic trading is taking on increased importance in our capital markets, this bill would make it more difficult for the SEC to properly oversee such trading. ``The bill would require the SEC to first issue a subpoena before it could compel a person to produce or furnish to the SEC algorithmic trading source code or `similar intellectual property.' This would undermine the SEC's examination authority by creating a gaping hole in its ability to gain access to firm records relevant to the examination. It would also have a devastating effect on the agency's ability to respond quickly in the event of another `flash crash' or such events in the future. In order to oversee the markets effectively, the SEC needs to be able to accurately and efficiently reconstruct order entry and trading activity, including for algorithmic traders.'' Public Citizen, a consumer rights advocacy group with over 400,000 members and supporters, wrote: ``Market volatility caused not by real events such as outbreak of a war, but by computers, including computer glitches, threatens to erase savings to some innocent investors and erodes general investor confidence. The recent swings in the markets attest to the need for robust and urgent supervisory inspection. The May 6, 2010 `Flash Crash,' where markets collapsed by more than $1 trillion in less than an hour, revealed that such a robust and urgent supervision has been lacking. The SEC required nearly a half year to investigate this incident before identifying a flawed algorithmic at one major trader. SEC oversight should be streamlined, not hampered. Trading instructions and records of human traders are already subject to inspection, so it should be no different for those instructions and records generated by a machine. Hiding source code from regulatory scrutiny will leave those responsible for mistakes as well as those attempting to manipulate markets unaccountable.'' These letters demonstrate the wide opposition to title II by groups that truly understand that robust oversight of algorithmic trading is necessary for the help of our makers. Madam Speaker, I include in the Record letters from these groups. February 13, 2018. Please vote NO on H.R. 3299 and H.R. 3978. Hon. Member, House of Representatives, Washington, DC. Dear Hon. Member: On behalf of more than 400,000 members and supporters of Public Citizen, we ask you to vote NO on H.R. 3299 and H.R. 3978, which are expected to be considered by the full House on Wednesday, February 14, 2018. Provisions in these bills would expose borrowers to abusive loans, investors to dubious securities, and Americans generally to a riskier financial system. H.R. 3299, the Protecting Consumers' Access to Credit Act of 2017, would allow predatory lenders to escape state limits on high interest rates. The bill would nullify the Second Circuit Court ruling in Madden v. Midland Funding. That decision provided that a financial institution that buys loans originated by a national bank could not benefit from the National Bank Act's preemption of state interest rate caps. While the Madden decision did not limit interest rates that banks charge on credit, it does limit nonbanks from evading state interest rate caps. This bill would pave the way for payday lenders, financial technology (fintech) companies and others to exploit that loophole and use a ``rent-a-bank'' arrangement in order to charge high interest rates. Twenty state Attorneys General have written to oppose this measure, noting that it undermines their efforts to protect borrowers from abusive loan rates. We urge you to oppose this bill. H.R. 3978, the TRID Improvement Act of 2017, is actually a package of bills that were considered separately in the House Financial Services Committee. One of these is the Financial Stability Oversight Council Improvement Act (formerly H.R. 4061). This measure would add numerous procedural requirements for the Financial Stability Oversight Council (FSOC) when it considers the designation or continued designation of a nonbank firm as a systemically important financial institution (SIFI). Current rules already make SIFI designation a high hurdle. The case of MetLife, for example, shows that firms enjoy more than ample methods to contest designation. After FSOC designated MetLife as systemically important, it contested it in court and the case is pending. Increasing the government's burden for designation would restrict its ability to apply enhanced supervision to major institutions. However, the largest bailout of the 2008 financial crash went to AIG, a nonbank engaged in reckless derivatives activity beyond the purview of banking supervisors. We oppose this measure. Another bill contained in H.R. 3978 is the Fostering Innovation Act (previously H.R. 1645). This bill amends Section 404(b) of the Sarbanes-Oxley (SOX) law by increasing from five to 10 years the time that CEOs of firms with less than $50 million in revenue must attest to the accuracy of their financial reporting. Congress approved SOX in response to the accounting scandals at the turn of the millennium. The rules are designed to promote accounting accuracy to the shareholders who have entrusted their savings to these firms. A Government Accountability Office (GAO) report found that companies with inferior financial reporting controls have a significantly higher likelihood of issuing a restatement of their financial accounts. Firms that are unwilling to oblige SOX should not be trusted with the capital of savers. Extending the CEO attestation requirement from five to 10 years exacerbates the problem. From an investor perspective, accounting safeguards are more important for smaller companies, since larger companies generally attract a larger and more sophisticated base of stock and bond holders who can perform effective oversight. We oppose this measure. A third bill that is part of the H.R. 3978 package is the National Securities Exchange Regulatory Parity Act (formerly H.R. 4546). This bill would eliminate state supervision of securities if they are listed on an exchange, even if the exchange has reduced standards compared with those of major exchanges such as the New York Stock Exchange. Under current law, state supervision is pre-empted only if the security is listed on exchanges with rules overseen by the Securities and Exchange Commission (SEC). Rules may differ between exchanges, but they must be approved by the SEC to ensure that they prevent fraud, serve the public interest and protect investors. Moreover, exchanges must adopt and enforce rules that are ``substantially similar'' to the major exchanges, known formally as ``Named Markets,'' under current law. The existing system deters a race to the bottom, where an exchange may attempt to attract companies with weaker rules. Conversely, this bill would actually promote that race to the bottom by removing the requirement that the exchange adopt rules that are substantially similar to those of the Named Markets. We oppose this measure. A fourth measure in H.R. 3978 is the Protection of Source Code Act, (formerly H.R. 3948). This measure would impede the ability of the SEC to conduct effective compliance examinations of market volatility involving computer-driven algorithms. The bill imposes a strict subpoena requirement before staff could inspect otherwise routine business records that involve source code. Market volatility caused not by real events such as the outbreak of a war, but by computers, including computer glitches, threatens to erase savings to some innocent investors and erodes general investor confidence. The recent swings in the markets attest to the need for robust and urgent supervisory inspection. The May 6, 2010 ``Flash Crash,'' where markets collapsed by more than $1 trillion in less than an hour, revealed that such robust and urgent supervision has been lacking. The SEC required nearly a half year to investigate this incident before identifying a flawed algorithm at one major trader. SEC oversight should be streamlined, not hampered. Trading instructions and records of human traders are already subject to inspection, so it should be no different for those instructions and records generated by a machine. Hiding source code from regulatory scrutiny will leave those responsible for mistakes as well as those attempting to manipulate markets unaccountable. We oppose this measure. Because of our opposition to these elements in H.R. 3978 and to H.R. 3299 we urge you to vote NO on these bills. As we are marking the 10th anniversary of the Wall Street Crash, it's clear that American consumers and investors deserve stronger financial reforms, not weakened protections that will make our economy more susceptible to another collapse. Thank you for your consideration. For questions, please contact Bartlett Naylor. Sincerely, Public Citizen.

Ms. MAXINE WATERS of California. Madam Speaker, I continue to reserve the balance of my time.

Ms. MAXINE WATERS of California. Madam Speaker, I reserve the balance of my time.

Ms. MAXINE WATERS of California. Madam Speaker, I continue to reserve the balance of my time.

Ms. MAXINE WATERS of California. Madam Speaker, I yield myself such time as I may consume. Madam Speaker, I rise in strong opposition to H.R. 3978, the TRID Improvement Act of 2017. H.R. 3978 has been dramatically expanded without input from Democrats to include several highly problematic and damaging bills. If enacted, this amended package of bills would ease the ability of high frequency traders to manipulate the stock markets undetected, encourage a regulatory race to the bottom in our Nation's stock exchanges, and harm investors and small businesses by weakening efforts to prevent accounting fraud at smaller public companies. Taken together, this deregulatory package could significantly undermine market stability and gut investor and consumer protections at a time when our financial markets are already rattled. Madam Speaker, from January 26 until last Thursday, the stock markets plunged just over 10 percent, becoming what the financial services industry calls ``stock market correction,'' and for the past two trading days, markets have rebounded the most since 2016. Although market corrections are not new, what distinguishes today's volatility is that it is driven by complex computer strategies designed to buy and sell stocks and options millions of times a day. As many of us have witnessed, the Dow Jones Industrial Average may be up 500 points and then down 600 in less than a few minutes. For the average American who was hoping to one day retire with dignity by investing her hard-earned savings in the stock market, it can be distressing to see such wild swings always wondering whether the markets are truly fair or whether she is going to be fleeced. Unfortunately, the passage of H.R. 3978 would likely make those swings more extreme and increase the likelihood of problems going forward. I am going to walk through each of the problematic provisions in this bill. Beginning with title IV, this provision is identical to H.R. 4546, the National Securities Exchange Regulatory Parity Act, which would weaken the standards for listing public companies for trading at U.S. stock exchanges. Today, exchanges listing standards set minimum requirements for a company's shares to be sold to the public without having to comply with State law. Exchanges can only revise these standards if the Securities and Exchange Commission first finds that new standards are substantially similar to the listing standards of the New York Stock Exchange. This bill would remove any separate analysis for changing the standards and, thus, automatically preempt State oversight. As a result, the bill would encourage a race to the bottom of listing standards as exchanges compete with each other to attract companies with less restrictions, even if the standards are beneficial to the investors. I believe that we should be strengthening the current analysis to promote fair and rigorous listing standards and only preempt State law when companies meet high standards. This is why I worked with the cosponsors last Congress to strike a bipartisan compromise which passed the House unanimously to require the SEC to develop a core qualitative listing standard. Unfortunately, my Republican colleagues have reversed their position in favor of empowering the industry over the investing public. Turning to title III which is identical to H.R. 1645, the so-called Fostering Innovation Act, this provision would eliminate the independent audit of a company's financial reporting controls for up to 10 years for newly public companies provided that they have $50 million or less in gross revenues and less than $700 million in outstanding shares. Passed in the wake of the Enron and WorldCom accounting scandals, the requirement that public companies conduct an independent audit of financial controls is one of the many accounting provisions required by the bipartisan Sarbanes-Oxley Act that directly benefits investors and public companies by improving the accuracy of their financial reporting. In fact, companies that are not subject to such review by an independent auditor are more likely to issue corrections to their financial reports leading to investor losses and higher losses for the company. Investors like these audits because they improve the veracity of the reports they rely on to make investment decisions. Today, truly small public companies--those with less than $75 million worth of shares--are already exempt from the audit requirement. But this bill would extend the exemption to large companies that are nearly ten times that size. The law already provides newly public companies with an exemption for 5 years. Extending it to a decade would harm investor confidence and all such companies, hurting the very companies the bill's supporters purport to help. Title II of this bill is the same language as H.R. 3948, the Protection of Source Code Act. This bill bans the SEC from inspecting source code used by regulated entities to engage in algorithmic or computer-driven trading and other activities that impact the securities markets and investors without first obtaining a subpoena. This provision would severely hamper the ability of the SEC to effectively examine persons like high-frequency traders and to investigate market disruptions. The recent stock market volatility, which has seen all of the major stock indices decline by more than 10 percent in less than 2 weeks, has been exacerbated by high-frequency traders using complex computer algorithms to determine when to buy and sell millions of trades per second by making it harder for the capital markets COP to detect and stop bad actors and rein in fraudulent trading schemes. This provision will inevitably harm everyday Americans and retirees who rely on fair capital markets to invest their hard-earned savings. To make matters worse, Republicans added a provision to pay for the cost of the bill by taking $2 million from the Securities and Exchange Commission's reserve fund. As a result, our financial watchdog will have less resources to support its capacity to oversee the markets through investments in IT and to respond to unforeseen market events like the flash crash. In short, this bill asks taxpayers to pay for the costs of diminished capital market oversight by taking away SEC's funding to respond to emergency market situations that threaten market stability. This provision doubles down on the irresponsible policymaking we often see by the opposite side of the aisle. The bill before us today would also make two less significant changes which I believe the Republicans included to garner additional support for the legislation. Nevertheless, even with these provisions, the package should be soundly rejected. Title I, which includes the version of H.R. 3978, TRID Improvement Act of 2017, that the committee previously considered, would amend a mortgage disclosure known as TRID or the know-before-you-owe disclosure that informs home buyers of the terms and conditions of their mortgage. Responding to the concerns of some in the real estate industry, this provision would amend the disclosure to account for the discounts paid to borrowers in States where simultaneous lender and buyer title insurance is issued. However, the revised form does nothing for bars in States that do not provide such special rates to home buyers, and the provision eliminates the Consumer Bureau's ability to fix this aspect of the form even if a problem arises in the future. The final provision, title V, is identical to H.R. 2948, the SAFE Mortgage Licensing Act. This title would ease the ability of individuals employed as mortgage originators to change employers by creating a temporary 120-day licensing regime so that they can continue to work at their new employer. This bill would effectively treat mortgage originators who work for State registered firms the same as federally registered firms and was unanimously supported by committee Democrats. Unfortunately, because this legislation has been packaged with other deeply problematic and destructive bills, sensible relief to these individuals that has broad bipartisan support is being held hostage by Republicans' efforts to roll back as many safeguards as they can this year. Madam Speaker, H.R. 3978, as amended, threatens many of the important reforms Democrats made to restore investor confidence to our capital markets after the worst financial crisis in generations. As the stock markets continue to wobble ominously in ways that threaten the savings of hardworking Americans, Congress should be strengthening oversight of the financial system, not weakening it. Not surprisingly, H.R. 3978 is strongly opposed by the North American Association of Securities Administrators who serve on the frontline combating securities fraud on the State level and by nonpartisan organization who speak on behalf of our Nation's consumers, investors, and unions, including Consumer Federation of America, Center for American Progress, Americans for Financial Reform, AFL-CIO, and Public Citizen, and so do I. Madam Speaker, I urge everyone to reject this harmful package of bills and to vote ``no'' on H.R. 3978. Madam Speaker, I reserve the balance of my time.

Ms. MAXINE WATERS of California. Madam Speaker, I continue to reserve the balance of my time.

Ms. MAXINE WATERS of California

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such time as I may consume. I would like to remind Mr. Pittenger that his State, North Carolina, again, along with Mr. McHenry, attorneys general have opposed this bill. They do not like this bill, and I just want to remind them that they don't have the support of their States in doing so. Mr. Speaker, I yield 2 minutes to the gentlewoman from New York (Mrs. Carolyn B. Maloney), the ranking member of the Capital Markets, Securities, and Investments Subcommittee on the Financial Services Committee.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, you have heard those of us who are opposed to this legislation repeat over and over again that this is all about predatory lending; that this bill would open the gates wide to the kind of abuses that we have been fighting so hard against. Mrs. MALONEY asked the questions: Why do you want to do this to your constituents? Why do you want to do this to the very consumers that we are supposed to be protecting? I have raised a question to those who come from States where the attorneys general oppose this legislation. The gentlemen from North Carolina and Pennsylvania, who are here in support of this bill, they are ignoring the fact that their State attorneys general are saying that this bill is a bad bill. Of course, if H.R. 3299 was really about expanding access to underserved populations, as the proponents claim, then they may be surprised to learn that the Nation's leading civil and consumer groups are all opposed to this legislation because it will harm consumers, not help them. According to a news article from last November, there is a reason the NAACP, the Southern Poverty Law Center, the National Consumer Law Center, the Consumer Federation of America, and dozens of churches, women's groups, and antipoverty organizations from around the country have denounced the bill. In September, those groups wrote a joint letter to Congress warning that H.R. 3299 ``wipes away the strongest available tool against predatory lending practices'' and ``will open the floodgates to a wide range of predatory actors to make loans at 300 percent annual interest or higher.'' The article goes on to say: ``But you don't have to take the NAACP's word for it, just take a look at the companies who are lobbying in favor of H.R. 3299.'' Well, they aren't many, as it is a complicated and obscure issue. But one of them, according to a Federal lobbying disclosure form, is a firm called CNU Online Holdings, LLC. Most customers of CNU Online Holdings don't even realize they use it. They are more familiar with CNU's parent company, payday lending giant Enova Financial; or its flagship brand, CashNetUSA. The bottom line is that this bill is not helping our consumers, but, rather, lining the pockets of predatory lenders who are looking for any way around State interest rate caps and consumer protections. Mr. Speaker, I reserve the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, this is odd. Here, we have another Member of Congress, whose State attorney general opposes the bill, and who has banned payday lending. So, here, Mr. Emmer is joining with Mr. McHenry and Mr. Pittenger, whose State opposes the bill, North Carolina. Again, the two of them are in opposition to their own State's attorney general. And now we have Mr. Rothfus from Pennsylvania and all of these speakers on the opposite side of the aisle who are coming here to support a bill that will open up the opportunity for payday lenders to basically rent a bank and put these payday loans out there at exorbitant amounts. Mr. Speaker, again, this is rather odd to see so many Members representing, supposedly, their constituents who come from States where payday lending has been banned and their attorneys general oppose this legislation. Mr. Speaker, I reserve the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I think my friend on the opposite side of the aisle, the chairman, is right. I must make sure that I am correct in the way that I identify my colleagues, who they are and what States they come from. So I would like to repeat: Mr. McHenry is from North Carolina. Mr. Pittenger is from North Carolina. The attorney general from that State opposes this bill, and this State has banned payday lending. Also let me just mention that Mr. Rothfus from Pennsylvania is another one who is opposed by his attorney general. His attorney general is opposed to this bill, is opposed to his representation, and Pennsylvania has banned payday lending. Of course, we were joined by Mr. Emmer, who is from Minnesota. Minnesota is in the same position as North Carolina and Pennsylvania. The attorney general of Minnesota opposes this bill, and Minnesota bans payday lending. So let's be clear. We want to make sure that everybody understands who these Members are who are coming here in opposition to their attorneys general, in opposition to their State. These are Representatives from States that oppose this bill. These are Representatives from States who have banned payday lending. So I want to be sure that I agree with my chairman. We should let everyone know who they are. We should pronounce their names correctly. We should be sure that all of their constituents understand who their Representatives are and what they are doing here today on this bill that will help to explode predatory lending. This is the rent-a-bank bill that would allow payday lenders to buy up debt from national banks and be able to charge whatever they would like, 300 percent and more, to the unsuspecting consumers. So I thank the chairman for helping me to make that clear. Mr. Speaker, I reserve the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, Chairman Hensarling has named the Members on my side of the aisle, the Democrats who support this bill. None of them are on the floor at this time. None of them came here to defend the position that they took. Some of them are reconsidering the vote that they took, and so I don't want him to try and wrap this bill around the fact that there were some Democrats who supported it. This is a Republican bill. This is a bill by the opposite side of the aisle that supports payday lending and the ability for payday lenders to continue to exploit their consumers in a new and different way. They simply allow them to buy up this debt from the national banks to be able to basically overcome usury laws. So while he would like everyone to believe there is all of this great Democratic support and he keeps saying over and over again how bipartisan this bill is, none of them are on the floor at this time. None of them came here to defend their position. None of them have said, ``I know that I am absolutely correct.'' As a matter of fact, some of them are raising questions about whether or not they should have voted for the bill, understanding it in one particular way, and some now understanding what it really does. So I thank the gentleman for his position, and I thank him for being a strong advocate for his position. I thank him for at least stepping up to the plate to say, in essence, he believes that he is doing the right thing, despite the fact that he has got Members on that side of the aisle who are going against their own States' attorneys general. But let us not believe that this is some great Democratic bill. It is not. Mr. Speaker, I reserve the balance of my time.

Ms. MAXINE WATERS of California. I yield an additional 1 minute to the gentleman from California.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield 2 minutes to the gentleman from California (Mr. Khanna), vice chair of the Congressional Progressive Caucus.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself the balance of my time. There was a reference to Senator Warner, and he said that the Madden fix bill must address the payday lender loophole. I alluded to some of this kind of thinking about those who may have supported the bill without really giving a lot of thought to this loophole, but I just want you to know that even the author of the bill, Senator Warner, is saying that the Madden fix bill must address payday lender loopholes. Mr. Speaker, H.R. 3299 is ultimately a bill that would make it easier for bad actors to get around interest rate caps that States have put into place to protect borrowers from predator payday pit traps. Let's be clear: the availability of affordable credit is very important in every community, and we should work together in ways to make sure that underserved communities have fair access to credit and banking services. But measures like H.R. 3299 do not productively advance that goal. In fact, the bill would do the opposite. It would open the door for nonbanks to ignore States' strong protections and make loans with high interest rates. The bill would usher in a wave of harmful, high-cost payday loans in States where such loans were previously disallowed. Let's not forget that last month Mick Mulvaney, who President Trump illegally appointed to serve as Acting Director of the Consumer Financial Protection Bureau, directed the Consumer Bureau to reconsider its sensible and much-needed rule on payday vehicle title and certain high-cost installment loans. That rule, put in place under the leadership of Richard Cordray, would require payday lenders to ensure that consumers can actually afford to pay off their loans. Essentially, Donald Trump and Mick Mulvaney are helping out payday lenders by undermining the Consumer Bureau's rule as well as rolling back and undermining many of the other critical protections put in place by Democrats in the Dodd-Frank Wall Street Reform and Consumer Protection Act. On top of his pull to reconsider the payday rule, Mulvaney has also drawn a Consumer Bureau lawsuit against a group of payday lenders who allegedly failed to disclose the true cost of loans which had interest rates as high as 950 percent a year. Mr. Speaker, Congress should be standing up for and enhancing protections for consumers, not legislating to make it easier for hardworking Americans to be drawn into payday debt traps. H.R. 3299 is widely opposed by over 200 consumer and civil rights groups, including the Leadership Conference on Civil and Human Rights, the NAACP, the National Consumer Law Center, the Southern Poverty Law Center, and many others. And so I think it is clear what we are advocating on this side of the aisle. We are simply saying that we should not create this loophole, that we should understand the struggle that many of us have been in to try and keep payday lenders from going into the most vulnerable neighborhoods, targeting the most vulnerable people, taking advantage of folks who have no place to turn and who need a few dollars until payday, taking advantage of them and trapping them into these loans and creating all of this debt for them. This would just go a long way to continue that kind of madness, and so I would urge Members to vote ``no'' on the bill. Mr. Speaker, I yield back the balance of my time.

Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such time as I may consume. Both of the gentlemen, Mr. McHenry and Mr. Rothfus, who are advancing this legislation come from States that don't support it. Mr. McHenry, North Carolina has banned payday lending. Mr. Rothfus, Pennsylvania has banned payday lending. And here you have a bill that would allow payday lenders to buy up debt from national banks and, basically, charge consumers whatever they would like to charge them. They would get around the ban of your own States. Do you really want to do this? Mr. Speaker, I reserve the balance of my time.