At a Financial Services Committee markup of two bills designed to undercut the Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, denounced the measures as efforts to disarm our financial regulators and weaken reforms established after the 2008 crisis.
Waters criticized both measures as “budget gimmicks to generate illusory savings.” For example, H.R. 1486 would only generate savings if Congress ceased all funding for CFPB activities. With H.R. 4894, Republicans fail to recognize that Orderly Liquidation Authority (OLA) is paid for by an assessment on our largest financial firms. Waters noted that, unfortunately, Republican actions would recreate the vulnerabilities in our financial system that led to the worst recession since the Great Depression.
The full text is as follows:
Thank you, Mr. Chairman, for holding this mark-up this morning.
Today, we will consider two measures that strike at the very foundation of the reforms we established in the wake of the most devastating economic crisis since the Great Depression. The first bill, H.R. 1486, would essentially repeal the Consumer Financial Protection Bureau (CFPB). The second bill, H.R. 4894, would strike the mechanism we created in the Wall Street Reform Act to safely unwind large financial firms whose unexpected failure would otherwise trigger financial panic across our economy.
Both of these bills, if enacted, would take our financial system back to September of 2008, when regulators did not have the tools to protect consumers or the broader economy from financial sector ruin. It would take us back to a time when we were hemorrhaging nearly 800,000 jobs a month, household wealth dropped by $13 trillion, and millions of our fellow Americans were facing foreclosure, eviction, and potential homelessness.
Democrats on this Committee, who still freshly remember the devastation of the crisis, will stand today in opposition to these measures.
The first measure, H.R. 1486, would repeal the independent funding of the CFPB. The Majority on this Committee will claim that this produces $6 billion in “savings.” However, it is important to remember that this can only be true if the Congress never appropriates any funding for the Bureau moving forward. So the Republicans’ clear intention for this bill is to repeal the very existence of the Bureau.
Sadly, this latest step is fully consistent with the Majority’s efforts since 2008. The Republicans opposed the creation of the CFPB; opposed independently funding it, as other banking regulators are funded; opposed its nimble and responsive structure; and oppose every single measure the Bureau has taken to protect consumers. Indeed, whether it is protecting service members from financial predation, guarding students from fraudulent, for-profit schools, or establishing clear rules-of-the-road for payday loans, the Republicans stand in lockstep opposition. This is despite the Bureau’s commendable record of returning over $11 billion to more than 25 million consumers.
The second measure we will consider today is similarly dangerous. This bill, H.R. 4894, will repeal Dodd-Frank’s mechanism for resolving a teetering financial institution, whose failure would otherwise send panic through our economy. Again, this bill uses budget gimmicks to generate illusory savings, while failing to recognize that the Orderly Liquidation Authority (OLA) is paid for by an assessment on our largest financial firms.
What’s worse is that the Republicans are pursuing this measure without offering any alternative on Too Big To Fail. Beyond their partisan talking points, the Majority on this Committee has advanced no credible mechanism by which we could resolve our largest bank and non-bank institutions. Every credible expert on this topic has said that if you want to demand that financial institutions can go through ordinary bankruptcy, you must take proactive steps – through the Dodd-Frank living will process or otherwise – to simplify their structures and limit their interconnectedness.
In short, the bills we will consider today are tremendously harmful for our nation’s economy, and will make consumers and investors less safe from financial ruin. The budget savings the bills purport to achieve are nothing more than gimmicks. Unfortunately, these measures will only serve to further the devastating cuts to social safety net programs like homelessness assistance, public housing, and Community Development Block Grants, that our House Republican colleagues have consistently advanced since 2011.