April 30, 2019

Brown Opening Statement at Hearing on Banking Guidance and Supervision

WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – delivered the following opening statement at today’s hearing entitled “Guidance, Supervisory Expectations, and the Rule of Law: How do the Banking Agencies Regulate and Supervise Institutions”.  


Sen. Brown’s remarks, as prepared for delivery, follow:


This is a hearing to talk about guidance – the non-binding advice from federal agencies that’s supposed to make it easier for the banking industry to follow the rules.


There’s a reason we have a lot of banking laws – it’s a complicated industry that affects everyone’s lives, and with a great deal of potential for special interests to do a whole lot of harm. It takes a lot of oversight to prevent terrorist financing and protect consumers and stop discrimination in lending and keep Wall Street from taking down the economy again. 


And banks need guidance to help them comply with those laws.


In fact, industry begs for guidance all the time.


So why hold this hearing at all?


The same reason we always seem to have hearings in this town – to make life a little easier for Wall Street.


Chair Crapo, I am concerned this hearing isn’t actually about making it easier for big banks to follow the rules – that it’s really about making it easier for big banks to get around them.


It’s about what kind of guidance the industry wants, and the kind of guidance it doesn’t.


Big banks love guidance that makes it easier to trade derivatives with big foreign banks. They love guidance that tells them how to track their capital or how to prepare for the stress tests. They love guidance that makes sure they can keep lending when a town is hit by floods or wildfires.


The guidance big banks hate – the guidance we’re actually talking about at this hearing today – is the kind that makes it harder for them to skirt the laws or take advantage of their consumers.


And as usual, Wall Street has plenty of senators lining up to help them.


Big banks hate guidance that explains how regulators are going to enforce the laws that say you can’t discriminate against people of color. They hated that one so much they persuaded Republicans to repeal it.


Guidance had never been repealed before. But Congress used the Congressional Review Act to repeal instructions from the Consumer Protection agency that would have made it harder for auto dealers to charge people of color more for car loans.


Big banks also hate guidance that says they should be cautious about risky leveraged loans that might crash the economy. They hate it because it cut into the huge fees they were getting for making these types of loans to corporations.


And they hate guidance that explains how the regulators are going to keep tabs on Wall Street. Last week Senator Tillis sent a letter to the GAO to start the process of having Congress step in, and tell regulators to take it easy on the very largest banks in this country.


And two weeks ago, the Office of Management and Budget announced they want the President to have direct influence over the guidance that independent banking agencies put out.


That means the President can lean over to his Chief of Staff Mick Mulvaney, who is also the head of OMB, and tell independent agencies what to do. And we saw how Mick Mulvaney ran the CFPB.


These agencies are supposed to be independent for a reason. We know how corporate special interests spread their influence around Washington.


The agencies policing Wall Street are supposed to be independent to guard against that influence. But now the same president whose cabinet looks like a Wall Street executive retreat wants to meddle.


And remember 2155 – the bill that gutted many of the rules for the biggest banks in the country, and for foreign megabanks?


Right in that bill, in section 109 to be exact, the bill that Chairman Crapo wrote and skillfully shepherded to the floor and that President Trump signed into law, Congress instructed the CFPB to give guidance on filling out mortgage forms. Republicans demanded, insisted, and fought for language instructing agencies to give more guidance. This is the kind of guidance they pretend to be opposed to today.


This isn’t about guidance – it’s about getting rid of the rules that Wall Street doesn’t want to follow.


And everyone else will end up paying for it.