OFFICIALS LEGISLATION INTEREST GROUPS PUBLIC STATEMENTS COMMITTEES VETOES

Operational Risk Capital Requirements for Banking Organizations

Floor Speech

Date: Feb. 27, 2018
Location: Washington, DC
Issues: Finance and Banking

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Mr. DAVIDSON. Mr. Speaker, I rise today to offer my support for H.R. 4296 and for the bipartisan work of our committee, the work our chairman has helped lead; and I am encouraged that this bill will establish clear guardrails for operational risk capital requirements and improve U.S. capital framework as a whole.

This legislation is another example of ensuring regulators work in the best interest of the U.S. economy rather than abiding by international standards that hold American businesses back rather than move them forward.

In fact, the very premise of this legislation reminds me of a song. I remember when Bill Clinton was running, he had a song about: ``Don't stop thinking about tomorrow. Yesterday is gone; yesterday is gone.'' It is all about the future.

Well, this piece of legislation that is in place today, established by the Basel Committee in 2006, is thinking about tomorrow, is thinking about yesterday. What happened in the past is constraining what could happen in the future.

So banks are reserving against past losses in an era that holds them from being able to adopt the business plans that maybe even under new leadership, new board members, and a whole new set of governance requirements that will get the company moving forward at a better growth rate. This is better for not just the company, not just the executives or the board members, but the consumers that would be served by this market.

Take, for instance, historic losses being reserved against. That capital is sitting there not actively employed in the market. Even the Basel Committee saw how ridiculous this rule is; so they updated their guidance, in 2016, to include historical loss experience as a relevant indicator instead of as the sole factor.

It is time that we move forward in the best interests of our country and make rules that help American businesses instead of hold them back.

Mr. Speaker, I urge my colleagues to support this vital legislation.

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