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Public Statements

Consumer Financial Protection Safety and Soundness Improvement Act of 2011

Floor Speech

By:
Date:
Location: Washington, DC

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Mr. FRANK of Massachusetts. First, the gentleman from New Jersey more consistently misstates things that I said. I suppose it's kind of flattering that he hangs on my every word. I just wish he didn't hang askew on my every word. He said I should be supporting this legislation. In fact, the gentleman from Alabama said it. Once again, listen to what they say on the other side.

This has three pieces. It has a single member versus a commission. More importantly, it increases the ability of the other bank regulators who have an historic terrible record of consumer protection and who the chairman of the committee, Mr. Bachus, says are there to serve the banks. It would put them in a better position to cancel the work of the CFPB. The gentleman from New Jersey said I've supported this. I've never supported anything remotely like that. The gentleman from New Jersey knows that. I have no idea why he would do that, except for this. And yes, I will impute some motive.

Of the three parts of the bill, the only one that they think won't be very unpopular is the one about a single director versus a commission. But, again, the gentleman said, oh, I misstated that or that I was in favor of something last year. No, I was never in favor of those parts of the bill.

By the way, as to the risk retention, I did say you could get the 4 percent if you also had a very good debt-to-income ratio and loan-to-value ratio.

So the pattern of misstatements of what I said, it's flattering that the gentleman is so interested in what I say. I did not ever support putting the bank regulators back in charge. In fact, I will say this about the gentleman from New Jersey. He's more clear about what he really believes.

Again, I hope the gentlewoman from West Virginia, when she closes, will tell us. She voted against this last year. She now says, oh, we're not trying to undo it. Well, has she switched her position?

The gentleman from New Jersey was very clear. He doesn't really like this, and he voted against it and he would abolish the whole thing. That's what we are saying, that people who voted against it last year. He says we made it partisan. No. When the vote came up on this, they all voted against it. I wish that wasn't the case, but they had voted against it because they didn't want an independent consumer agency. The chairman of the committee said it again today on television: We don't worry about the FDIC or the Federal Reserve. We worry about an agency whose sole mission is to protect the consumer without worrying about how the banks work.

And then we had the performance by the gentleman from Wisconsin, again, talking only about one part of it and claiming, oddly it seemed to me, that this somehow hurts the small banks versus the bigger banks. In fact, the small banks are given preference with regard to who gets examined.

And in terms of the ability to overturn rules, no, it's not simply--and this is one of the things some people may misunderstand. Things that threaten the system might be the action of one particular entity like AIG, but they could also be a pattern like subprime loans, particularly subprime loans issued by nonbanks. This bill regulates, for the first time, those nonbanks.

So let's go back over this. Ms. Warren came up with this. And I do want to address the single member versus commissioners.

The one issue they have found, it was originally proposed by Ms. Warren, and I introduced the administration's bill to make it a commission. We had hearings. We had conversations. Every single consumer group that we dealt with--and the gentleman from Wisconsin mentioned all his supporters. There wasn't a single consumer group there. The AARP just came out against their bill, as have all of the consumer groups--the Consumer Federation, et cetera. They persuaded me that a single member would be better than a commission. I acknowledge we had hearings. I listened to people who were for it.

So here's the debate. We have everybody who voted against establishing this in the first place, who are against it in principle, who think we should leave it to the bank regulators, they want a commission. We have everybody who supports the entity as an independent consumer protector, therefore, a single member. I listened. I was persuaded. So, yes, I will acknowledge having changed my position based on the evidence.

I will repudiate, once again, the gentleman's inaccurate suggestion that I was for the other parts of this. No, I was not. I think putting the majority of the bank regulators able to overrule virtually anything doesn't work.

And the proof of that? The Republicans offered their own version last year, the gentlewoman from Illinois (Mrs. Biggert). It created a 14-member council, Secretary of the Treasury, Secretary of Defense, a bunch of others, and they were empowered to set up a hotline. If they got things from the hotline or the Web site that were complaints about the banks, what did they do with them? They sent them to the very financial regulators who have failed to do things in the past.

That's where we are. That's what they preferred. They opposed then, and I believe continue to oppose, an independent regulator whose primary role is the consumer.

As the gentleman from North Carolina pointed out, they want to give the FDIC and the other bank regulators the ability to cancel what the consumer regulator does, but it's not reciprocal. If the consumer regulator thinks that the bank regulators have been too lax in not protecting consumers in what they still have, that's not reciprocal. It is very clear. They have never liked consumer protection.

Finally, Mr. Chairman, I want to say that they do the banks a disservice. I stress again that the banks were not the problems here, particularly the community banks and the credit unions. They apparently think that if banks have to protect consumers, they will fail. That's unfair to the banks.

With that, I yield back the balance of my time.

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Mr. FRANK of Massachusetts. First of all, let's resolve one contradiction in the Republican amendment. Some have said, why are you now opposing what you originally supported? Well, this is a clear example. We never supported anything like this. We always thought it had to be two-thirds. And here's what happened.

There is no comparable banking agency which can be overruled by the other agencies. But the Republicans got very nervous about this and their banker friends were in a bit of a twitter. And they said, Save us from this horrible notion of consumer protection. I say it doesn't speak well for banks if they think consumer protection undermines safety and soundness.

So we said, okay, here's what we'll do. To lower these fears, we will say if it does threaten the whole system, two-thirds can overturn it. We didn't think that was very likely. It was to try to calm people down. They transform it with this amendment into saying that five regulators, because the consumer bureau couldn't vote, five regulators who have overlapping terms who may have been appointed by previous Presidents, regulators who represent the very regulatory agencies that have not been good about consumers can overturn the consumer bureau. This amendment canceled the fundamental reason for having a consumer bureau.

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Mr. FRANK of Massachusetts. I yield myself such time as I may consume.

Mr. Chairman, I appreciate the amendment. I've had a chance to think about it, and I am persuaded by its merits. I think this is a genuinely helpful amendment.

But I do want to take this opportunity in this 5 minutes to talk about broader issues, and I do so, I will say--I would not extraordinarily have done this, to take this 5 minutes in this way, but the rule was so outrageously stingy in refusing adequate debate time on some central issues that we have no option but to use this perfectly reasonable amendment as an opportunity to say what we were prevented by the rule from saying.

By the way, there's one part of the rule that should be mentioned that I didn't have time to talk about earlier. The regular order that my Republican colleagues promised has been beat up pretty good recently, and certainly by this rule.

The Congressional Budget Office says that their effort to expand the head of the consumer agency to a five-member commission will cost $71 million over the 5-year period. Now, that violates their CutGo rule, but they don't care that much about violating their rules when it suits their ideology. But they found an offset. What's the offset? The offset is a bill that the House already passed to save money from the Federal Housing Administration, the FHA.

So here's what they're doing. They're reaching back, and the rule retroactively merges the two bills. How's that for the regular order? It's a rule that retroactively takes a bill that already passed, saves money within the FHA, and instead of using that either for deficit reduction entirely or for easing people's ability to get housing, they use it to offset their extra bureaucracy here in this bill.

Beyond that, I want to talk again about the fundamental issues. Some on the Republican side have apparently undergone a conversion. I don't want to not take "yes'' for an answer. Apparently they are now in favor of an agency that they vigorously opposed last year and the year before.

We had a special markup. The gentleman from Alabama incorrectly said he never voted against this. Well, someone claiming to be the gentleman from Alabama attended a markup when we voted on this in committee and voted against it, as did the gentlewoman from West Virginia, as did virtually everyone on the Republican side. Instead, they supported a substitute from the gentlewoman from Illinois which did nothing--well, I take it back.

It said that all the regulators could get together, plus the Secretary of Defense, the Secretary of the Treasury--I don't know who else--and they could set up a hotline for consumers and have a Web site, but any information taken in would go back to those same regulators.

So they have consistently opposed it, and that's why they're so wounded. How dare we say that they're not in favor of this agency? Because we were there when they tried to kill it, we there when they voted against it, and we understand that they don't want to see it go forward. They are prudent, however. They understand that it would not be a good idea to attack it head-on, so they're trying a sideways attack, most importantly by saying that the bank regulators--they wanted to leave consumer protection with the bank regulators. That was the Biggert substitute.

The FDIC, the Federal Reserve more than anybody else, because they're the key bank regulator of consumer affairs--I don't know who came up with that--they would put the bank regulators back in charge of this agency by letting them overturn by majority vote anything the agency does. They say, Well, we're just going back to where you were. No, we were never for that. In fact, we're totally reversing.

And now we have the amendment of the gentlewoman from New York, and the gentlewoman from West Virginia--you know, there's a children's book where somebody says, I can believe 10 impossible things before breakfast. Well, I'll give the gentlewoman credit for moderation. She only said one impossible thing before dinner. She said we must have a confirmation. Confirmation is important. She should tell that to her Senate colleagues. Forty-four Republican Senators, not the Senator from Massachusetts (Mr. Brown) or the Senators from Maine, Ms. Collins and Ms. Snowe, 44 of them, enough to filibuster, have said, We wouldn't confirm anybody.

So I hope someone will explain to me: How can the manager of the bill get up and say confirmation is important, we can't allow this to go forward unless there's confirmation, we won't allow the powers to go forward unless there's conformation, knowing that there can't be confirmation, not because the President was late, as he was--and I was critical of him for doing that--but because the Republican majority says they won't confirm?

And then they complain there might be a recess appointment.

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