Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, discussed the importance of the Financial Stability Oversight Council (FSOC) in keeping our financial system safe at a hearing today with Treasury Secretary Jacob J. Lew on the FSOC’s annual report to Congress.
“With Wall Street reform, we created the FSOC to look across the entire financial system, identify gaps that may exist between regulators, and take action to prevent another meltdown,” Waters said in her opening statement. “No longer would we allow banks to shop around for the weakest regulator or move money around the globe to escape regulation.”
In her remarks, Waters derided Republicans for their continued assault on the Dodd-Frank Act, particularly in light of the massive fraud uncovered at Wells Fargo this month. She questioned why “in this Committee, the answer is deregulation, and more opportunities for Wall Street to write the rules of the game” and pointed to Chairman Jeb Hensarling’s Wall Street deregulation bill, H.R. 5983, which received bipartisan opposition in Committee last week.
The full text of Waters’ statement, as prepared for delivery, is below.
Thank you, Mr. Chairman.
Secretary Lew, thank you for joining us today to discuss the Financial Stability Oversight Council’s (FSOC) 2016 annual report.
Last week, the U.S. Census reported that median household income increased by more than 5 percent last year, the largest increase in both percentage and dollar terms since the government began tracking this data nearly fifty years ago. The Census Bureau also reported that the poverty rate declined by 1.3 percentage points, and that the number of people without health insurance in the United States declined by 4 million.
All told, our progress is remarkable compared to where we were eight years ago, when during the last days of the Bush Administration we were shedding more than 700,000 jobs per month, and millions of people were being displaced from their homes.
But make no mistake – we need to be doing more, especially to address the wealth gap, and particularly for African American and Hispanic households whose economic security was devastated by the financial crisis.
Unfortunately, however, there’s an unnerving sense of amnesia from my colleagues on the other side of the aisle about the dark days of the crisis. Here we are, eight years after that devastation and more than six years after Dodd-Frank became the law of the land, considering the same harmful deregulatory proposals that would undo the critical progress we’ve made.
Just think about this – two weeks ago, one of the largest banks in the United States, which was supposedly one of the most well-run, was found to have opened more than two million unauthorized deposit and credit accounts for unsuspecting consumers. This is a massive fraud of historic proportions that begs the question of what further reforms may be needed. And yet in this Committee, the answer is deregulation, and more opportunities for Wall Street to write the rules of the game.
And like the Consumer Financial Protection Bureau, the FSOC is on the front lines of those attacks.
With Wall Street reform, we created the FSOC to look across the entire financial system, identify gaps that may exist between regulators, and take action to prevent another meltdown. No longer would we allow banks to shop around for the weakest regulator or move money around the globe to escape regulation.
Earlier this year we saw just how effective the FSOC can be in preventing companies from growing too large or risky as to threaten the economy. General Electric Capital voluntarily agreed to shrink itself and sell off much of its consumer financial business, returning to its roots as an industrial company. The firm is now smaller, safer, and less likely to cause risk to the rest of the financial system if it becomes stressed. In turn, FSOC allowed GE Capital to shed its “systemically important” designation and the higher regulatory standards that came with it.
What this means is that Wall Street Reform is working as it should: the system is creating incentives for firms to shrink themselves, and it’s ensuring that companies like GE renew their focus on creating jobs in the real economy.
And yet despite this progress, my colleagues on the other side of the aisle are intent on dismantling the FSOC. Nowhere has this effort been more apparent than in the Chairman’s Dodd-Frank repeal bill, which received bipartisan opposition in the Committee last week. This harmful legislation would strip the FSOC of its ability to designate non-banks for heightened supervision, repeal all existing designations for large, complex firms like AIG, and otherwise limit its ability to operate effectively.
This bill, and others, would put Wall Street back in the driver's seat and leave consumers and investors to fend for themselves. Rather than continuing this Committee’s focus on harmful roll-backs, we should be supporting further reforms, and exploring how we can do more to prevent scandals like the one at Wells Fargo.
So I look forward to your testimony Secretary Lew on the state of our financial markets and what we need to keep doing to prevent a repeat of the 2008 financial crisis.