Financial Institution Bankruptcy Act of 2014

Floor Speech

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Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.

Ladies and gentlemen of the House, I rise in strong support of H.R. 5421, as amended, the Financial Institution Bankruptcy Act of 2014.

It is intended to ensure that the resolution of large, complex financial institutions on the verge of insolvency can be better facilitated under the Bankruptcy Code. I support this legislation for several reasons.

First, it addresses a real need, which is recognized by the regulatory agencies, bankruptcy experts, and the private sector, that the bankruptcy law must be amended, so that it can expeditiously restore trust in the financial marketplace after the collapse of a major financial institution.

Such was the case with the failure of Lehman Brothers in 2008, for example, which caused a worldwide freeze on the availability of credit, wreaking havoc on Wall Street, as well as on Main Street. The near collapse of our Nation's economy that resulted from Lehman's failure revealed that current bankruptcy law is, unfortunately, ill-equipped to deal with complex financial institutions that are in economic distress.

This legislation, accordingly, creates a court-supervised, orderly liquidation mechanism that will be guided by the regulators.

In sum, this process will allow a failing financial institution to transfer its assets to a newly-formed bridge company over a single weekend, which will promote confidence in the financial marketplace.

The institution's equity and debt will remain in the bankruptcy case to be administered by a trustee under court supervision. As a result, value assets will be maximized for the benefit of creditors, and the marketplace will be stabilized.

Additionally, I support the legislation because it appropriately recognizes the important role the Dodd-Frank Act has in the regulation of large financial institutions. Without a doubt, the Great Recession was a direct result of the regulatory equivalent of the Wild West.

The Dodd-Frank Act goes a long way toward reinvigorating a regulatory system that makes the financial marketplace more accountable and, hopefully, more resilient. The act also institutes long-needed consumer protections that have up until now not been available.

Title II of the Dodd-Frank Act establishes a mandatory administratively-driven resolution process to wind down large financial institutions. Title II is a critical enforcement tool for bank regulators to facilitate compliance with the act's heightened regulatory requirements for large companies.

Nevertheless, the Dodd-Frank Act clearly recognizes that bankruptcy should be a first resort and that the title II's orderly liquidation process should be a last resort.

In fact, title I of the act explicitly requires these companies to write so-called ``living wills'' that must explain how they will resolve their financial difficulties in a hypothetical bankruptcy scenario. This is because bankruptcy law has, for more than 100 years, enabled some of the Nation's largest companies to regain their financial footing.

I am from Detroit, and I remember that General Motors and the Chrysler Corporation were major beneficiaries. H.R. 5421 will ensure that bankruptcy is a truly viable alternative to the Dodd-Frank Act's resolution process.

I am pleased to note, as has been referenced by the chairman of the Judiciary Committee, that this legislation is the product of a very collaborative, bipartisan, and deliberate process, which should be the norm, not the exception, when it comes to drafting legislation, so a tip of my hat to Chairman Goodlatte and to the subcommittee chairman for the work that they have done in bringing this legislation to this point.

For example, this bill, unlike similar legislation in the Senate, doesn't include any controversial provisions aimed at undoing the important protections of the Dodd-Frank Act.

I should also note, however, that H.R. 5421 does not include any provision allowing companies to have access to lenders of last resort. Nearly every expert recognizes that such access, even if it is the Federal Government, is a necessary element to ensure financial stability.

I want to acknowledge the excellent level of cooperation on both sides of the aisle on the Judiciary Committee in producing the legislation that is pending before us today, and I urge my colleagues to support this measure.

I would like to just add that my friend, Spencer Bachus of Alabama, is a longtime Member who has been particularly active over the years in the areas of administrative law, as well as immigration and criminal justice.

I find him an individual of principle who has worked on many bipartisan initiatives. I understand Representative Bachus' father often used the adage, ``If you can't say anything nice about a person, don't say anything at all.''

Mr. Bachus has certainly adhered to that advice, as he was a consummate gentleman who wielded the gavel with fairness at all times when it was his turn to sit in the chair.

Mr. Speaker, I reserve the balance of my time.

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