Following the passage of H.R. 5421, the Financial Institution Bankruptcy Act of 2014, Congresswoman Maxine Waters (D-CA), Ranking Member of the Financial Services Committee, made clear her position that this technical change to the federal bankruptcy code does not mean we should revisit or fundamentally change the important protections enacted under the Dodd-Frank Wall Street Reform Act.
The bill, which would simply give bankruptcy courts additional authorities when resolving large, complex financial institutions, passed by voice vote this afternoon. Waters released the following statement:
“I applaud the Judiciary Committee for working across the aisle to make bankruptcy for financial institutions more predictable and less dangerous to the economy. The technical changes to the bankruptcy code included in H.R. 5421 will make it easier for judges to manage the failure of financial firms.
However, passing this legislation does not mean that we should undo important improvements enacted as part of the Wall Street Reform Act, which contains a number of provisions that protect consumers, investors and the economy. These include ‘living wills,’ which require banks to demonstrate how they could be wound down in bankruptcy without harming other firms or sectors of the economy. Even an improved bankruptcy process can’t protect our economy until banks have submitted credible living wills. Dodd-Frank also established the Orderly Liquidation Authority, to ensure regulators can protect the economy and U.S. financial system from unforeseen disaster.
Improving the bankruptcy code is only the first step in ensuring we do not repeat the mistakes of the past. We must preserve – and use – all powers available under the Dodd-Frank Act, to ensure firms are not too large or complex to undergo ordinary bankruptcy proceedings, and continue to develop their emergency liquidation facilities.”