Today, Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, gave the following statement at a full Committee hearing on the Federal Reserve’s supervision and regulation of the financial system with Randal Quarles, Vice Chairman for Supervision, Board of Governors of the Federal Reserve System.
As Prepared for Delivery
Mr. Chairman, this is the first hearing since the 2018 midterm election, in which voters gave Democrats a majority in the U.S. House of Representatives next Congress. Of course, that also means changes in Committee leadership and in the agenda for the Committee.
Given the expressed desire by the American people for a change, I do feel it is appropriate to discuss Dodd-Frank and the harmful efforts of the current Committee Majority to weaken and roll back important parts of this law. These efforts include those by some to weaken capital standards for our largest banks. As we can see in one of the slides before us, capital standards are an effective method to prevent bank failures. Make no mistake, come January in this Committee, the days of this Committee weakening regulations and putting our economy once again at risk of another financial crisis will come to an end.
Dodd-Frank created the position of Vice Chairman for Supervision at the Fed, as one of the several actions in the law to help rectify the Fed’s inadequate supervision and enforcement prior to the financial crisis. It is essential that the Fed keeps a watchful eye on the financial institutions it supervises, and makes strong use of its existing enforcement tools to crack down on institutions that break the law.
I must say that I am concerned about proposals the Fed has put forth this year to reduce capital and liquidity requirements for the largest financial institutions, which would weaken strong safeguards established by Dodd-Frank to protect the U.S. economy from another costly financial crisis.
That is why in September, I and 18 other Democratic Members sent a letter to Federal Reserve Board Chairman Powell urging the Fed to maintain strong capital requirements for Global Systemically Important Banks.
The current higher capital standards and related regulatory improvements required by Dodd-Frank have strengthened the resiliency of the largest banks, as well as the entire financial system without undermining economic growth. In fact, bank lending to businesses has increased 80 percent since 2010, and banks of all sizes are making record profits – on average, they have made $167 billion in profit annually the last three years. As we saw in the last crisis, it is the average, hardworking Americans that will suffer the consequences if Washington deregulates Wall Street megabanks again.
I look forward to discussing these and other matters with Vice Chairman Quarles today. Thank you and I yield back the remainder of my time.