Date: 2016-04-14
Speaker: MAXINE WATERS (democrat)
Chamber: H
State: California

Mr. Speaker. I yield myself such time as I may consume. Mr. Speaker. we are now considering a bill that not only could put our community banks at risk. but strikes at the heart of why compromise in Congress can be so challenging. H.R. 3791 would direct the Federal Reserve to raise the asset threshold under the small bank holding company policy statement. allowing small banks and private equity firms to take on additional debt for mergers and acquisitions. The threshold would be increased to $5 billion in consolidated assets from $1 billion. Let me stress that this would be 5 times as much as the current threshold and 10 times as much as the initial level that was in place before a bipartisan compromise was enacted last Congress. The small bank holding company policy statement is important because it allows small institutions. like community banks and minorityowned depositories. to access additional debt so they can continue serving their communities. However. it is important that this threshold is carefully calibrated so it cannot be abused by speculative investors. If the threshold is raised too high. it will have the opposite of the intended impact. It will lead to mergers and acquisitions. riskier banking activities. and a reduction in banking services and credit availability to rural. lowincome. minority. and underserved communities. Indeed. Democrats and Republicans on the Financial Services Committee worked together just a little over a year ago to provide relief to almost 5.000 community banks by doubling the asset threshold under the policy statement to the current level of $1 billion from $500 million in assets. We did so after working closely with regulators and determining that $1 billion was the most appropriate threshold to help community banks grow without making them targets for mergers and acquisitions. At $1 billion. the policy statement covers 89 percent of banks in the country. providing relief to the vast majority of community banks and minorityowned depository institutions. I am trying very hard to understand why my colleagues are reneging on that compromise and undermining the careful. considerate policy that we enacted. The administration has threatened to veto this measure because of the potential danger to our smaller banks and to the communities they serve. They have called this bill an unnecessary and risky change because we know what will happen if the Federal Reserve has to make this change. For one. raising the threshold would have a serious impact on the consolidation of community banks. The majority purports to be concerned with consolidation in the banking industry and the disappearance of community banks. This bill will all but ensure that larger banks and investors come in and purchase smaller banks and then cut branches in the communities that need them the most. We have already seen this happen with banks across the country. both large and small. that have been forced to shut down hundreds of branches because investors and shareholders demand higher and higher returns. I supported the change we made last year to $1 billion because it would help ensure that small community banks are able to continue serving their communities. That is the point of the small bank holding company policy statement. We must help our communities retain access to local banks that know the specific needs of their consumers and small businesses. This bill would do the opposite. Even those that did survive wouldnt be able to provide the same personalized service because of their size. I am particularly concerned about how this would impact our underserved communities. Another problem with this legislation is that it would allow banks with as much as $5 billion in assets to operate under lower standards and less oversight by regulators. Many community banks failed during the 2008 financial crisis because they became overleveraged. Certainly. if a bank makes bad decisions in the amount of risk they take on. then it is appropriate to let it fail. but the failure of any bank. and especially a bank with up to $5 billion in assets. has a tremendous impact on the community it serves and on the Deposit Insurance Fund. At the end of the day. more bank failures will increase premiums for all the banks protected by the Deposit Insurance Fund. We cannot allow reckless behavior that benefits investors and bank shareholders at the expense of small banks and the communities they serve. Mr. Speaker. H.R. 3791 is not a small change. It is a risky move that threatens both bipartisanship and these already polarizing times. as well as the safety and soundness of our community banks and the customers they serve. I urge my colleagues to join me in voting "no" on this bill. Mr. Speaker and Members. allow me to reiterate the point. We worked very hard in reaching across the aisle. in making compromise. in making commitments to each other. and in agreeing that we would raise the asset limit from $500 million to $1 billion. We had that agreement. and before the ink was dry on the deal. here we have a bill that says: So. we really didnt mean it. We want to raise it to $5 billion. Ha. ha. ha. People wonder why we dont compromise more. why we cant get together more. why we cant understand what is in the best interests of all of our constituents. to put aside our differences. and work on behalf of those people we say we care about. The other side claims it cares about community banks. Then why would it renege on this agreement? If it cares about community banks. why would it put them in the position of being bought up by private equity firms and special money interests. which only want to find a way to make more money and more profit by closing down branches and firing people? That is what they do. When these private equity firms come in. they borrow a lot of money in order to make these kinds of purchases. Then guess what? They have to take the money back. So guess who are the victims of this kind of agreement? They are the small banks and the constituents. While my chairmana gentleman whom I like very much and get along with very wellopens with statements that have nothing to do with this bill and while he talks about the plight of those in our communities who are suffering. let me tell you why they are suffering not only in his community but in communities across this country. It is because in 2008. we had a subprime meltdown and a crisis that was created by these kinds of reckless public policy attempts. We discovered that. because of all of the exotic products and all of the recklessness of some of the big banks and others. we put our people at risk. and we put our constituents at risk. Guess what? They lost their homes. Many of them are homeless and are on the streets now. Many of them cannot afford the rents that have risen because of the crisis that we have come out of. If you really want to help small banks and community banks and if you really want to help your constituents. you will not be for a bill like this one. This only puts them at risk. I ask my colleagues to vote "no" on this bill. Mr. Speaker. I reserve the balance of my time.