Today will receive testimony from the honorable randall orosz, Federal Reserve vice chairman for supervision. The honorable eleanor mcwilliams chairman of the ftse and the honorable rodney hood chairman of the ncua. Welcome to all of you. This hearing provides committee an opportunity to examine the current state of and recent activities related to regulatory and supervisory activities of these agencies. Its been over a year now since the enactment of s 2155 Economic Growth regulatory relief and Consumer Protection act and the work of the agencies to implement most of the laws provision. Your agency should also carefully review the existing supervisory frameworks and make necessary adjustments to appropriately align them with the tailoring rules and requirements. On july 30, 2019 all Republican Banking Committee members and i sent a letter to the federal banking regulators urging your agencies to finalize several outstanding positions of s 2155 such as the Community Bank leverage ratio and short form call reports. Further taylor organizations to promote Economic Growth including addressing the current expected credit losses accounting standard and local rule, the interaffiliate interaffiliate margin and madden. Thank you for acting on many of these priorities. I encourage you to continue exploring additional opportunities to tailor these rules. In that july letter as well as october 2018 letter to your agencies several Banking Committee republicans and i urged your agencies to revise the volker rule. Including using your discretion to address current funds overly broad definition. The covered funds provision was left relatively untouched. I encourage agencies to take quick action to address the covered funds issue by revising the definitions overly broad application to Venture Capital other longterm investments and loan creation. Separately in september shortterm borrowing rates spiked as a result of large Corporate Tax payment coming due in 300 billion in treasuries hitting the market. Even in light of Banks Holding surplus of cash at the federate currently around 1. 4 trillion. In light of these events banks could have stepped in to alleviate the volatility in those markets by lending some of the excess cash they hold that the fed so why did they do that . Some suggested that certain aspects of that fed supervision and regulations imposed after the 2008 financial crisis may have exacerbated this problem. Specifically the treatment of cash versus treasuries. Although the fed has taken some steps to address the issue in the short term by buying treasuries and lending funds, its important that the fed reviewed the details of its current regulatory and supervisory regime for potential longterm fixes. Now quickly turning to guidance senators Tillis Purdue rounds kramer and i wrote to the gao in february asking for its legal opinion as to whether three Federal Reserve supervision and regulation letters constituted a rule under the congressional review act. In its october response gao concluded that two of the letters including one providing a new supervision framework for large Financial Institutions in another related to recovery planning our rules under the cra and are required to be submitted to congress for review. During the Banking Committees april hearing on this very issue i urged your agencies to follow the cra and submit all rules to congress. Even if they had not gone through formal notice and comment rulemaking. To continue providing more clarity about the applicability of guidance. I encourage the federal banking regulators to take a more deliberate approach Going Forward and take any necessary steps to rectify informal guidance that has not been submitted to congress. In january 2019 the ncua announced a portion of regulations that would be reviewed as a part of the process through which the agency reexamines all its existing regulations every three years. The Comment Period for that review process has since closed and i look forward to learning more about the regulatory recommendations provided to the ncua and the roadmap fractions Going Forward. Finally, the Banking Committee has been exploring Digital Currencies over the last few congresses. Especially in light of the recent development of the Digital Currency started by facebook. In july i asked Federal Reserve chairman powell about his understanding of and the feds role in the project. Although chairman powell noted that the fed has set up a working group to focus on libra and is in contact with other regulatory agencies he also said there is not any one agency that can stand up and have oversight over this. Given its scope, regulators across the globe continue to evaluate libra if potential impact in the marketplace and consider appropriate necessary regulatory responses. It seems Digital Currencies are inevitable. In the u. S. Needs to lead by providing clear rules of the road. During this hearing i look forward to learning more about the status of addressing the overly broad covered funds definition in the volker rule especially with respect to longterm investments, how the agencies are thinking through the recent turmoil in the repo market and what adjustments might be appropriate for longterm fix. Whether the supervisory framework that applies to banks currently needs to be updated and better reflect the changes made in the tailoring rules and how the agencies are thinking about the labor project Digital Currencies including what the u. S. Regulatory framework into what the u. S. Regulatory framework merits consideration to balance innovation and protect users and privacy. I thank each of you for your willingness to join the committee today to discuss your agencies regulatory and supervisory activities on these important issues. Senator brown. Thank you mr. Chairman. Welcome to the three regulators. I want to start by noting typically when we have financial irregularities testify the currency is also here. Mr. Auden had a conflict today. He is expected to announce changes to the Community Reinvestment act shortly changes to the Civil Rights Community and others are very concerned about. I share those concerns i expect we will have him up before the committee to talk about this proposal and other activities at the occ. We all saw how wall streets financial schemes hurt regular people when they blow up in bankers faces like they did 11 years ago. You all saw the devastation of the crisis whether you are a staffer in the Senate Whether serving at the agency you now lead who weathering the private equity firm after a stint at treasury you had a front row seat, you could argue about or discuss response ability, we can talk about that later. Thats why im concerned about the collective amnesia you all appear to have. As you make changes in bank rules. Devastation in neighborhoods like mine in cleveland, the next time it complicated and bigger spaces, what is sometimes harder to see are the schemes that hurt families and the economy even when they work exactly the way wall street intended them to work, my state is a setting of one of the schemes, 12 years ago before the financial crisis a giant private equity firm bought a Nursing Home Company based in toledo ohio that operated facilities nationwide. Soon the Nursing Home Company was being strangled by debt from loans that laid off hundreds of staff, let its patients suffer under negligent horrifying condition. According to the Washington Post they met there was not enough nurses to respond to patients. The Health Code Violation rose dramatically in pennsylvania, a patient broke her hip and crashed to the floor when a staffer tried to do a twoperson job and move her on her own. Patients face other Living Conditions that no human being should have to endure waiting and soiled clothing in dirty beds with help that would never come in all the while the wall street private equity firm was extracting more and more profits, last year the Nursing Home Company went bankrupt and it did not stop the private equity firm for making huge profit on their investment. That is what happens when leveraged loans and collateralized loan obligation and leverage by design by wall street, wall street extracts the profit out of the company the rest of us workers, patients, family and community paper. Today wall street looks for profit anywhere they can find them in these schemes squeeze money out of every part of the economy. The hospital pennsylvania or it may be in ohio but its also manufactured Home Communities and i have seen some of those are private equity cayman and raise the rent of 50 and people are having to live there at much higher rent than they did not expect to manufactured Home Communities in New Hampshire not just harming families but entire communities. Imagine how bad itll be if these complex Financial Transactions blowup like the sub prime mortgages did in 2008, this is one of so many challenges working families face, we have a report this week that shows half of American Workers are stuck in lowwage jobs. One in four families spend more than half of their income on retina you till the spring think of the tenure economy where growth is declined the last couple of years but think about that half of American Workers are stuck in lowwage jobs and one in four spent half of their income in rent and utilities, if one thing goes bad in their lives they lose their home. 40 of americans are so short on cash they would be forced to borrow money to cover 400. Those of the people the three of you work for, you dont work for the president or wall street or the banks you work in part for the half of the population that cannot come up with 40 that cannot come up with 400. More and more families have debarred to get Student Loan Debt, credit card debt, Student Loan Debt all higher before the cross is. Wall street pulls out more of their paychecks rate if regular americans are struggling in ten years into the recovery when the stock market is booming, what will happen when there is a recession. This cannot be how the Financial System should work, the regulator job is to protect profit from big banks and Big Companies and protect our economy and Financial System in ordinary families that the system is supposed to serve not the other way around. When the president , trump talked about draining the swamp he really meant the train workers in giving wall street free reign as we have seen to happen in the train workers give them free reign to pray on them and bring every last cent out of the poor community. President uses his phony populism, racism, antisemitism, antiimmigrant slander to divide and distract us from the ways he and his cronies have betrayed working families and struggling more than ever. That is not how democracy should function, im worried if you do not stand up for our families so many in our community and economy and our democracy is at risk. Thank you. We will turn to our witnesses and i will ask you to give your remarks. Thank you very much. Chairman crapo and Ranking Member brown, thank you for the opportunity to appear today. My colleagues and i join you on the cusp of a significant milestone which is the full and faithful implementation of congress effort to improve regulation in the form of the Economic Growth regulatory relief and Consumer Protection act, today i will review the steps weve taken and share information on the Banking System and discuss the continuing need to ensure the framework is coherent and effective. The act was an effort to consolidate a decade of work of hifinancial reform in response o the conditions facing the organizations and the customers. It was also rooted in longstanding congressional practice of reviewing the work done in the immediate aftermath of the crisis of addressing any gaps and of ensuring public and private resources go toward the best and most efficient use. The report which is delivered with my testimony today confirms that we have a stable healthy and resilient Banking Center with the quiddity positions, stable Loan Performance and strong loan growth, steady improvements in safety and soundness and areas of focus in the operational resiliency and cyber related risks. The Banking System is substantially better prepared to manage unexpected shot today and before the financial crisis. And now when the waters are calm is the right time to examine the efficiency and effectiveness for protection against future storms. We last years reform, they made a significant down payment on that in less than 18 months after we implemented all the provisions. Earlier this year we completed a cornerstone of legislation tailoring our rules for regional banks and building on the existing work with greater risks and Higher Standards and more scrutiny. We previously relied heavily on the total assets for those risks and for the cost of the Financial System would incur, the simple asset was critical, rough and ready risk sensitive nor complete. Our new rules and play broader set to assess the need for greater supervisor scrutiny and maintain requirements with oversight for the largest and most complex forms. We and our interagency colleagues have also worked on a range of measures to address the issues they think Smaller Banks in particular attention to the Community Bank business model. Our goal through this period of intense bigotry activity has been to faithfully implement congress instruction in those instructions speak to a broader need in central to her ongoing work to ensure our Regulatory Regime is not only simple and efficient and transparent but also coherent and effective. Financial regulation like any area of policy, is a product of history. Each component dates from a particular time and place and designed, debated and enacted for particular set of needs. No rural could ever be truly green. Gaps in areas for improvement will always reveal themselves over time and our responsibility is to address those gaps without creating new ones to understand fully the interaction among regulations to reduce complexity where possible and to ensure our counter rulebook supports the safety, stability and strength of the Financial System. My colleagues and i are paying attention to coherence in a capital regime for a smooth transition. To a sensible treatment of new products and technology and to clear consistent supervisory communication which reflects and reinforces our regulation and law. My written testimony in the supervision report cover each of these areas in greater detail and i appreciate the opportunity to discuss today. Thank you. And i look forward to answering your questions. Thank you very much. Chairman williams. Members of the committee and fellow staff, thank you for the opportunity to testify today. 18 months ago i began serving as a 21st chairman of the ndi c. During this. They have undertaken a great amount of work with a particular emphasis on three of our goals. Strengthening the Banking System that continues to evolve, ensuring fdics can meet the needs of consumers and businesses, and Technology Solutions and encouraging innovation at Community Banks and at the fdic. The fdic has progress in each of these areas and i appreciate the opportunity to share the progress with this committee. The fdic work to strengthen the Banking System i like to begin regarding the current state of the industry. U. S. Banking industry has an extended Economic Growth. In july, this expansion became the longest record in the United States by nearly every metric the Banking Industry is strong and well positioned to begin supporting the United States economy. The state of the Banking System remains strong fdics continuing to monitor changes in work to strengthen the Banking System by modernizing our approach including outdated regulation transparency, enhancing preparedness, assessing new and emerging in creating the workforce of the future. With written statement details the many actions fdic has taken in each of these areas, these efforts are toward a stronger Banking Syste