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 speech on the Senate floor today in opposition to S.2155, The Economic Growth, Regulatory Relief and Consumer Protection Act.
Brown’s remarks, as prepared for delivery, follow.
Ten years ago – almost to the day – this country was on the verge of a financial crisis that would end up wrecking the lives of millions of families.
The experts – the so-called experts – had their heads in the sand. They shrugged off the warnings. They told the public everything was fine.
Jim Cramer was telling hardworking Americans to invest their money in Bear Stearns, saying “I’m not giving up on the thing.” Bank of America was putting the finishing touches on its plan to buy the subprime lender Countrywide, which they called “the best domestic mortgage platform.”
Hank Paulson – the last Treasury Secretary who got plucked from Goldman Sachs until Secretary Mnuchin came along – downplayed homeowners’ pain. He said “You know, the stock market goes up and down every day more than the entire value of the subprime mortgages in the country.”
Meanwhile, advocates in communities – the people who were actually dealing with the consequences of the building crisis – were sounding the alarm.
The fair lending group Greenlining began meeting with Alan Greenspan at least once a year, starting in 1999 – Nine-teen-ninety-nine – to warn about predatory mortgage lending. And attorneys general from across the country started to caution about troubling trends.
In Cleveland, we saw home prices climb 66 percent in just ten years with the housing market juiced by “flipping on mega-steroids,” according to a government panel that investigated the crisis.
City officials in Cleveland began to hear reports that predatory home refinances were being pushed on borrowers, regardless of whether they could afford to repay the loans.
Foreclosures began to shoot up in Cuyahoga County – starting with 5,900 filings a year in 2000 and jumping to nearly 15,000 by 2007. My wife and I live in zip code 44105, near Slavic Village in Cleveland, and in the first half of 2007, that zip code – 44105 – had more foreclosures than any other zip code in the country.
The City of Cleveland went to the Fed and asked it to use its authority to restrain subprime lending.
The Fed did nothing.
The people in charge in Washington were too certain, too detached, perhaps too comfortable to listen to the warnings from Ohioans, and people across this country.
We all saw what happened. All those people who had the hubris to say that the economy could keep growing while the middle-class was being looted – those people weathered the crisis just fine.
No one with a cable show had his house foreclosed on.
Nobody who tanked the economy went to jail.
In fact, many of these same people now have fancy jobs in fancy buildings on Wall Street and in the White House.
But in zip codes like 44105 and places like it across the country, parents were sitting down at kitchen tables to have painful conversations with their kids.
The CEOs and boards at the banks, and the people in Washington who were supposed to be watching them, failed these Americans. That’s why Congress – including some Republicans – did something about it, to stop this from ever happening again.
We passed a law that created important protections for the financial system, for taxpayers, and homeowners, To hold banks and watchdogs accountable to prevent another crisis.
But Wall Street never gives up that easy. Big bank lobbyists – the same ones who were so sure the 2008 crisis wasn’t going to happen – went to work.
On the day President Obama signed Wall Street Reform into law, a top Wall Street lobbyist said it was “halftime.”
The economy is a game to these people. They can’t tell the difference between putting millions of Americans’ lives and homes and savings at risk and a game of basketball.
Piece by piece, Wall Street has gone to the agencies, gone to the courts, and gone to Congress to dismantle the consumer protections we put in place. The drumbeat is constant. They always want a new exemption, or a new, weaker standard, or a new tax break.
The last year or so has been a good time to be a bank lobbyist.
After the crisis, we created the Consumer Financial Protection Bureau to represent the interests of regular Americans who have to fight with their bank or their credit card company. Now, in this Administration, the Consumer Bureau is being run by a guy who believes it shouldn’t even exist.
The Consumer Bureau’s new protections are under attack too.
All Democrats, and even some Republicans, agreed that we should protect customers’ right to take their bank to court. But bank lobbyists convinced the Vice President to come to this very Senate chamber – late at night, when only the special interests are awake – to vote against hardworking families.
Instead of protecting those families, he voted for Wells Fargo, and Equifax, and Citigroup. That rule is gone. Piece by piece.
The watchdogs who are supposed to be protecting Main Street all come to their jobs fresh from Wall Street and K Street. The President’s cabinet looks like an executive retreat for America’s biggest banks. They’ve released blueprint after blueprint for how they want to dismantle all the rules put in place after the crisis. And they are putting their people in place to do it.
They just rammed through Congress a bill to give Wall Street an enormous tax break that will cost American families 1.5 trillion dollars to give big bank CEOs a raise. That’s 10,000 times more than what we spend at HUD every year to protect kids from toxic lead.
Not long ago, another bank lobbyist told us their plan. “We don’t want a seat at the table,” he said. “We want the whole table.”
And they are about to get it under the bill the Senate will consider this week.
Piece by piece, they have been tearing these protections apart. This bill gives them the whole table. It leaves nothing for working families.
And if you thought 31,000 dollars for a dining set at HUD was a bad deal for taxpayers, wait until I tell you about the billions of dollars in risk that are packed into this effort.
This bill puts Americans at risk of another bank bailout. The Congressional Budget Office – the independent, non-partisan scorekeeper – confirmed yesterday that this bill would increase the probability of a big bank failure and a financial crisis, and add $671 million to the deficit.
So we’re going to weaken the rules, and pay Wall Street for the privilege of doing it.
This bill weakens stress tests for all large banks, even Wall Street megabanks that are designated as “global systemically important banks” like JPMorgan Chase ($2.5 Trillion in assets), Bank of America ($2.3 Trillion), Wells Fargo ($1.9 Trillion), and Citigroup ($1.9 Trillion). Together these banks hold 51 percent ($8.6 Trillion) – more than half – of all industry assets. These are banks whose collapse could cause harm that ripples across the world.
Together all of the country’s biggest banks took about $239 billion dollars in taxpayer bailouts. Without rigorous, annual stress tests, taxpayers could once again be on the hook if “too big to fail” banks collapse and we don’t have the right tools in place to see it coming.
And it opens the door to a weakening of oversight of foreign megabanks operating in the U.S. – the same banks that have repeatedly violated U.S. laws. Let’s run through a few of their rap sheets:
- Santander: illegally repossessed cars from members of the military that were serving our country overseas.
- Deutsche Bank: manipulated the benchmark interest rates used to set borrowers' mortgages.
- Barclays: manipulated electric energy prices in Western U.S. markets.
- Credit Suisse: illegally did business with Iran.
- UBS: sold toxic mortgage backed securities.
It didn’t have to be this way.
I tried for months to work on a commonsense package of reforms aimed at lifting up our community banks and credit unions. These are the local financial institutions that fuel homeownership and small business in our communities. The ones that didn’t cause the last meltdown. The ones that get dragged down when big banks crash the economy.
I support targeted relief for these banks and regional banks that do things right and play by the rules. And I wanted to give more help to average Americans who have to cope with unfair tricks and traps.
But that’s not what this bill is.
Why should we have to roll back rules for the largest banks in Switzerland in order to help out community banks or credit unions in Ohio.
That’s a false choice. We could pass a bill today that helps these local banks invest in their communities, while keeping in place strict rules for Wall Street megabanks.
But Wall Street and Republicans don’t want to do that. They want to use the little guys – the community banks we all want to help – to extract something for the big guys.
Washington is suffering from collective amnesia. Thankfully, the IMF – an agency of international financial experts – has done us a favor to help jog memories.
They’ve catalogued 300 years of history of bank deregulation efforts all across the globe. You know what they found? We deregulate, the economy explodes, we put in protections, the economy gets better, and we deregulate again. Wash, rinse, repeat.
We can do better. We owe it to the people we serve to do better.
The Senate owes it to the 176,000 kids in Ohio, and other kids across the country, whose lives and educations were disrupted by the foreclosure crisis.
We owe it to the millions of people whose retirements were wiped out while big banks were bailed out.
We owe it to the students who graduated into the Great Recession, and may have lower earnings for the rest of their lifetime.
The watchdogs who understand these markets are trying to warn us.
Paul Volcker has cautioned us about this bill. He was a Fed Chair for Presidents Carter and Reagan. So has Sheila Bair, who helped us put protections in place after the crisis. Sheila Bair is a Republican warning us about this bill.
Tom Hoenig, the current Vice Chair at the FDIC – selected for that position by Republicans – has told us this bill is harmful. Barney Frank has said he’d vote “no” if he were in the Senate. Former Fed Governor Dan Tarullo has outlined a long series of concerns.
Sarah Bloom Raskin, Antonio Weiss, Gary Gensler, law professors, fair housing advocates, big bank experts, people who provide legal services across this country and civil rights groups are all telling us we cannot go down this path again.
We know what happens next. It is hubris to think we can gut the rules on these banks again, but avoid the next crisis.
There are so many important things that this body could be spending its time on.
We could be addressing the fact that workers and retirees in Ohio, and across this country, could have the pensions they spent a lifetime earning slashed in half if Congress doesn’t act.
We could be addressing the fact that 400,000 Ohioans have to pay more than half their income each month just to keep a roof over their head.
We could be creating jobs, tackling the opioid epidemic, lowering drug prices, or investing in our crumbling roads and bridges. But instead, we’re here doing more favors for the largest banks.
Whose side are we on? Megabank lobbyists, or American taxpayers and homeowners and students and workers?