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Transaction Account Guarantee Program Extension Act - Continued

Floor Speech

Location: Washington, DC


Mr. CORKER. Mr. President, I am here today to talk about the bill before the Senate, a 2-year extension of the TAG Program. As everyone knows, this will be the second 2-year extension of a program that was put in place as an emergency measure taken during the height of the financial crisis. It was also meant to end once the crisis passed.

I have exceptionally high regard for community bankers in Tennessee, as I know you do for those in Pennsylvania. They have had to deal with the financial crisis of 2008, a recession that had been left in its wake, and if that is not bad enough, since the passage of Dodd-Frank, they have had to deal with an onslaught of new regulations.

Many of these regulations, no doubt, were ill-conceived. If we remember, a lot of those were put in place as aspirational goals. All of them have dramatically increased the compliance burden of being in a small banking institution. Yet none of them has been on the table to be fixed or improved by us in the Senate since 2010. Obviously, there are a lot of reasons for this, but from a standpoint of community bankers, there is no doubt this has been a shame.

I am very hopeful that in the next Congress we will have a meaningful dialog about striking a better balance in terms of bank regulation, particularly as it relates to our community banks. Some of what we passed in Dodd-Frank makes a great deal of sense, but much of it does not, and it is for us to devote energy to fixing and improving the law where there are flaws.

If we want to help community banks, this is where we should focus our energy, and I know there are a lot of bipartisan ideas around about how we can do that. I think all of us have heard from community bankers in our States about the onslaught of regulations they have, some of which was meant to deal with some of the bigger institutions. Again, that, to me, is where we can focus in a bipartisan way to give some relief to our community banks.

Giving out limitless deposit insurance, though, I suppose some people have decided is a consolation prize, and I hate that. That is too bad. We should fix Dodd-Frank if we want to help our community banks. But the vote in front of us today is a TAG extension, so I wish to speak a little bit about that specifically.

There are a series of policy reasons why it is time to end the TAG Program. I will go through a couple of them. First of all, the FDIC's Deposit Insurance Fund, or the DIF, is undercapitalized. This is a fund of reserves meant to protect taxpayers against an unexpected law stemming from bank failures. By law, the DIF is required to be at a 1.35-percent of total outstanding deposits. It is, however, only at .35 percent today. I do not see the wisdom in extending an insurance to $1.5 trillion in transaction deposits at a time when the Deposit Insurance Fund is already undercapitalized.

Second, there is ample liquidity in our banking system as to support loan demand. In fact, the ratio of loans to deposits is at a historical low. Liquidity to make loans is not the problem; slow economic growth is the problem. Extending insurance to keep these deposits around then fixes a problem that simply does not exist.

Third, the overwhelming majority of TAG deposits are actually with the largest banks. Some small banks have said they want an extension, but this is largely not a small bank product. Seventy-one percent of TAG deposits are in the largest banks. Sixty percent of TAG deposits are held by just the top five banks. I do not see the wisdom in leveraging the FDIC and the taxpayer to insure the deposits sitting in our country's largest financial institutions.

Fourth, extension of the TAG Program raises serious moral hazard issues. It encourages large deposits in banks that may be troubled with no market discipline. Moral hazard is why, throughout the history of deposit insurance, it has always been limited. I think Washington has contributed quite enough to moral hazard problems over the last 5 years--several years--and I think it is time for us to stop.

Finally, if we want to help community banks thrive and succeed, our focus should be on dialing back Washington's desire to micromanage our banking institutions. The regulatory pendulum of Washington trying to micromanage these institutions has absolutely gone too far and our focus should be on getting the pendulum back to a more reasonable place. Extending limitless FDIC insurance for these transaction deposits does not further that policy objective. In fact, it takes us in the other direction.

Let me put it another way: How can we ever get DC out of the business of telling banks where and when to lend if we are having DC guarantee all their deposits? The answer is we cannot.

I am offering a couple amendments that help insulate the taxpayer. Although, in reality, it is time to fully end this program. Even more important, it is time for us as members of the Banking Committee to take up the real challenges still facing our financial system.

I wish to say one other thing. I know all of us are watching as the President and Speaker Boehner and others are looking at dealing with the fiscal issue; we call it the fiscal cliff. I think all of us know what we need to do to deal with the fiscal cliff. We need a true fiscal reform package that I hope would be in the range of $4 trillion to $4.5 trillion, so we can put this issue behind us and begin this next year with it in the rearview mirror and our economy taking off. Then we would show the world we have actually dealt with these issues, and people in our own country would have the confidence to invest in our country because they know we in Washington have been responsible in that way.

One of the big discussions taking place right now is revenues. I think, at the end of the day, we are going to come to a conclusion very soon that it is probably time for us to go ahead and rescue the 98 percent of the country that have been caught up in all this. My sense is we are going to have some resolution to that in the very near future.

What I have found--and one of the reasons we don't have a solution--is that people on both sides of the aisle are focused on the revenue side, but so far there has been almost no discussion on the entitlement reform side. Candidly, I think it is uncomfortable for many in Congress and even at the White House, obviously, to deal with this issue. As a matter of fact, on this issue, what I would say--and I know there is a difference of opinion--here we have a country that every developed nation knows its greatest threat is fiscal solvency. Economists on both sides of the aisle have said the greatest threat to our country is us not dealing with the fiscal solvency and the $16 trillion debt we have, which is growing. Yet, in fairness, we have a President who so far has not been willing to lay out a plan to deal with this issue. While it pains me to bring this up--because I think we as elected officials and the White House should sit down and deal with this issue because we know it is the biggest issue our Nation faces--it appears to me it is very possible we may move through the end of this year only dealing with rescuing the 98 percent of the people who have been caught up in this debate.

So there is a moment--I hate to use this word, but there is another moment coming--which probably will force us to deal with another issue in other ways; that is, the debt ceiling. While I don't think it is mature that we have to have a line in the sand to force us to sit down and deal with this issue, it is where we find ourselves in this Congress and in dealing with this White House; that is, needing a point of leverage to focus these discussions.

I hope we will sit down and come up with a $4 trillion, $4.5 trillion package to put this behind us--one that has both revenues and entitlement reforms--a solution that again would put this in the rearview mirror. But where I see us going is it is possible that by the time year end comes, all we will have done is rescued the 98 percent of taxpayers who have been caught in this and then moving to the debt ceiling as the next line in the sand that will be a forcing moment to cause us to deal with this issue. I think that is where we are headed unless something happens. I hope something big happens that I can support.

I will tell my colleagues this: I have been through this process. We all have. The 112th Congress knows more about this fiscal issue than any Congress in the history of man. We have been through two dry runs. We know what the cost of each change is. We know how much it saves Congress and saves our country if we deal with these issues. One thing I wish to say is I cannot support another process that leads us to another fiscal cliff.

Again, I hope the President and Speaker Boehner will come up with a solution that puts this behind us. We all know what we need to do. What we have lacked around here is the political courage to sit down--both sides of the aisle have issues; I understand that, but we have lacked the political courage to sit down and deal with this issue. It appears to me, again, that where we may be headed is toward the end of this month rescuing the 98 percent, putting that issue over to the side, and then using the debt ceiling or the CR as that forcing moment to cause us to finally come to terms with this fiscal issue.

I regret we are in a place in our country where we have to have these forcing moments, but that is where I believe we are headed. I can say to everybody in here, what I cannot abide by, one Senator--since we know what all the solutions are, we know the changes that need to be made, we can sit down and go through columns on either side, including revenues and changes, to get us in a place where we need to be, but we haven't done it, and I am afraid we are heading to a place where we are going to have to have another forcing moment.

I thank the Chair and yield the floor and I note the absence of a quorum.


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