Bloomberg News
WASHINGTON — House Financial Services Committee lawmakers debated a number of bills in a Wednesday markup, as Republicans looked to limit some of the power of the Federal Reserve, and Democrats tempted their GOP counterparts with would-be bipartisan legislation.
Republicans put forward a number of measures that would curb the federal banking regulators powers, after what the GOP sees as a failure on the part of the Fed to supervise Silicon Valley Bank. The panel will not vote on the bills or their amendments until the debate is finished, which is likely to continue late into the evening.
Rep. Andy Barr, R-Ky., chairman of the Subcommittee on Financial Institutions and Monetary Policy, introduced a large package made up of five separate bills. The package would require documentation and implementation “guardrails” when the Fed invokes its emergency lending facilities, increase reporting requirements for the Federal Deposit Insurance Corp. in its receivership and resolution activities for Congress, as well as require the Financial Stability Oversight Council to disclose its analysis used to determine the cost of any proposal related to systemic financial risk.
“The recent bank runs and systemic instability reveal that the federal financial regulators are opaque and non-transparent to Congress and the American people, especially in emergencies, when the stability of the U.S. financial system is under threat,” Barr said. “There is a clear need for sunshine on those regulators, and enhanced accountability and transparency when their failures are really responsible.”
One of the bills would also codify that the heads of banking agencies testify semi-annually in the House and Senate. Currently, only the chairman of the Fed is required to do so, and that the Treasury Secretary is required to testify annually.
Yet another of the bills would also mandate that the vice chairman for supervision, a position currently held by Michael Barr, have experience working in or supervising banking organizations. Barr does not have that experience.
Democrats opposed the package. Rep. Maxine Waters, D-Calif., the ranking member of the committee, said that the package would “hamstring regulators’ efforts to respond to and resolve due to bank failures.”
“Specifically, this bill would make it harder to properly invoke a systemic risk exception, limit the effectiveness of the Feds emergency lending authorities and to top it all off, the bill includes an unscrupulous political attack on the current vice chair of supervision that makes him ineligible to serve in his current role,” she said.
Waters said that the bill would slash the funding of the Financial Stability Oversight Council and the Office of Financial Research, and gut the ability of FSOC to receive advice from a panel of experts on climate change “in response to extreme MAGA Republicans’ ridiculous claim that climate change and diversity is what cause the banks to collapse.”
“Nothing in this bill would address the root causes of the recent bank failures,” she said. “Instead this bill meddles unnecessarily with regulators’ tools and flexibility to respond in an emergency despite the fact that regulators have gone out of their way to make confidential supervisory information available.”
Democrats offered a number of amendments to Barr’s bill and others debated at the markup that Democrats hoped could garner bipartisan support. Some of those included pausing bonuses or other discretionary income should a bank leave open the position of chief risk officer, along with requiring that the vacancy of chief risk officer be made public, and closing what Waters said was a loophole in Dodd-Frank that allows some banks to evade the law’s enhanced prudential standards depending on whether it has a holding company.
“Let me just say that not only have I found a loophole, this is an opportunity for you to get at those regulators you’ve been complaining about all day,” she said. “Make them do their job. I would not only like to talk with you, but you indicated you’re going to be talking to a lot of people about a lot of things. I just want to legislate and I want to legislate with you.”
Lawmakers came closest to agreeing on an amendment offered by Rep. Al Green, D-Tx., that he said would “clarify that it is the sense of Congress that our community banks, including rural banks, community development financial institutions and minority depository financial institutions did not cause the crisis, yet may have been harmed by the crisis and certainly shouldn’t have to pay for the crisis.”
Barr eventually said he would agree to work with Green on the measure after committee Republicans couldn’t figure out whether the amendment would apply to banks with more than $5 billion in total consolidated assets, or simply more than $5 billion in uninsured deposits — the threshold outlined in a recent FDIC proposal — or if would only apply to the current special assessment or future ones as well.
“Mr Barr, I make an appeal to you to take advantage of this unique moment in time to bring the committee together so we can have unanimous consent to move forward with this piece of legislation,” Green said.
Source: nationalmortgagenews.com