Today, the House Financial Services Committee is holding a markup of H.R. 1731, H.R. 2445, H.R. 4545, H.R. 5287, H.R. 5294, H.R. 5332, H.R. 5330, H.R. 5322, H.R. 5315, and resolutions to extend the Task Forces on Artificial Intelligence and Financial Technology.
Ranking Member Patrick McHenry’s opening remarks as delivered:
“Thank you, Chairwoman Waters, and thank you for holding this markup today. I’ll be brief and save my substantive remarks for the specific bills as they come up.
“I would like to make a general observation though about this markup. This Committee seems to be focused on the quantity of bills reported out of the Committee and not on the quality of the bills.
“Moreover, particularly with the bills on this agenda, we seem to be wading into the jurisdiction of other Committees – like the Education and Labor Committee or the Ways and Means Committee. And I know members on each side of the aisle pursue other Committees as well at the beginning of every Congress, but I think it’s important we stay focused on our jurisdiction. There’s plenty to say grace over in our substantive and real jurisdiction.
“I’m also perplexed that this Committee continues to believe that it is the Education and Labor Committee. The Chairman of the Education and Labor Committee, Mr. Scott, already has a 1,200-page bill that reforms the student loan program. We could debate the merits of that bill; however, we aren’t on that Committee. So, we have to leave it to that Committee, that’s how Congress works.
“Moreover, the Education and Labor Committee continues to examine the underlying problems with the student loan debt crisis and works daily—not just in one hearing like we’ve had—to identify solutions to the problem.
“Now I know we all should do our part to take on this major issue, but I don’t understand why we continue to make the private student loan industry the scapegoat for the issue that the federal government created.
“And this is a federal government creation. The student loan debt crisis was a decision back in 2010 to nationalize the student loan program and we’re dealing with the ramifications of that. But we’re not getting to the fundamentals, this is all superficial stuff, it’s political stuff, rather than the substance of how student loans are made.
“And I’m sympathetic to the plight of students who have escalating student debt. I also believe we should be providing more resources and information so prospective students can make sound financial decisions about their future.
“But as we know from other segments of the credit market, it all starts with strong underwriting and ability to repay standards. Those two mechanisms ensure safety and soundness in our financial and credit markets and would be a laudable piece of any type of reform to the student loan industry that is federally mandated and controlled. But those things are non-existent in this federal government program.
“The federal government does not have a strong underwriting standard to evaluate a student’s financial situation. Nor does the federal student loan program focus on a student’s ability to repay. Together, this is a recipe for disaster and has brought on this crisis.
“Moreover, I don’t know why my friends on the other side of the aisle want to crowd out the private student loan industry. And let me tell you why, this is not about if this is innately good or bad what the government does, or private industry does.
“But the private student loan industry is clearly doing something right – with a default rate of less than 3 percent that would be the goal of our federal program. The default rate for our federal program is 18 percent.
“So clearly there is something missing between what the federal government is doing versus what the private sector is doing.
“Competition is good, healthy competition. Competition keeps prices low, keeps rates competitive. Competition keeps quality in the market.
“So, let’s have some standards here. But let’s look at the facts and let’s look at the statistics here and as the federal program that is putting the screws to students, is putting the screws to young people and putting a generation in debt, an unsustainable debt that has now led to a crisis level.
“I'll end my remarks where I started. More bills are not always better, particularly when there is no identified problem to be solved—we have to have hearings to do that.
“But I appreciate the Chairwoman whittling the list down so that Republicans will be able to work across the aisle on a more manageable number today, and I appreciate that. And I hope we can finish this out on a good note.”
Watch Ranking Member McHenry’s opening remarks here.
