Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee, gave the following opening statement at a full Committee hearing entitled, “Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity, and Accountability of Depository Institutions?”
As Prepared for Delivery
Good morning. Today we are here to conduct oversight of regulators at the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, and the National Credit Union Association (NCUA), as well as receiving written testimony from the Office of the Comptroller of the Currency.
Welcome back, Chair McWilliams, Vice Chairman Quarles and Chairman Hood.
I am very concerned that our banking regulators are following the dangerous deregulatory blueprint that the Trump Administration laid out in a series of Treasury reports, and checking off deregulatory items one by one. For example, they have moved to weaken capital, stress testing, and other requirements for the largest financial institutions; taken action to weaken the Volcker rule, a rule which prevents banks from gambling with taxpayer dollars; and proposed weakening the swap margin rule, which would threaten our economic stability for a $40 billion giveaway to Wall Street megabanks. In rolling back important reforms put in place in the Dodd-Frank Wall Street Reform and Consumer Protection Act to protect consumers, investors and the economy, regulators are opening the door to bad practices that contributed to the devastating financial crisis of 2008.
I am also very concerned that regulators are making a brazen attempt to weaken the implementation of the Community Reinvestment Act (CRA), under the guise of modernization. CRA is an important law that was passed in 1977 to prevent redlining and to ensure that banks are meeting the credit needs of the communities where they are chartered. While the implementation of the law needs updates to reflect the modern banking landscape, those changes should make the law more effective, not less. Ninety-eight percent of banks already receive a passing grade on their CRA exams, which shows that the law needs more teeth to get positive results for underserved communities.
In the wake of regulators’ approval of the SunTrust/BB&T merger, which creates the sixth largest bank in the nation, I would like to make it clear that this Committee will continue to closely scrutinize large bank merger proposals. Regulators have a responsibility to ensure that bank mergers serve the public interest and do not create megabanks that threaten our economy and financial system. It is not acceptable for bank mergers with implications for communities across the country to receive a cursory review or a rubber stamp from bank regulators.
This Committee has been very focused on diversity and inclusion in the financial services sector, including through the Committee’s historic new Subcommittee on Diversity and Inclusion. Earlier this year, I and Congresswoman Beatty, who chairs the Subcommittee on Diversity and Inclusion, wrote to the megabanks and requested their diversity and inclusion data and policies. The information we received reinforces what we already know, that these banks badly need to improve their diversity and inclusion. For example, less than one percent of megabank spending is devoted to diverse asset managers and suppliers.
Since each of the agencies represented by our witnesses today has a dedicated Office of Minority and Women Inclusion, I expect to hear today about their diversity and inclusion efforts.
I look forward to discussing these matters with our witnesses.