President trump, live, unfiltered coverage, on cspan 2, on demand at cspan. Org impeachment. Listen with the free cspan radio app. Next, testimony from financial regulators on oversight and other issues, including Digital Currency, banking liquidity rules and the impact Climate Change could have on the financial industry. Held by the Senate Banking committee, this is an hour and 40 minutes. The committee will come to order. Today, we will receive testimony from the honorable randall quarrels, the honorable mcwilliams, chairman of the fdic and the honorable rodney hood, chairman of the ncua. Welcome to all of you. This hearing provides the committee of supervisory activities of these agencies. Its been over a year now since the Economic Growth regulatory relief and Consumer Protection act and the work of the agencies to implement most of the provisions, including the tailoring rules for u. S. Banks and foreign banks. Your agency should also carefully review the supervisory frameworks and make any necessary adjustments to appropriately align them with the tailoring rules and requirements. On july 30th, 2019, all of the Republican Banking Committee members and i urged your agencies to s2155 Community Bank ratio and short form call reports and further taylor regulations, including addressing the accounting standard, volker rule, interaffiliate margin and madden. Thank you for acting on many of these priorities. I encourage you to continue exploring additional opportunities to taylor these rules. In that july letter as well as in october 2018 letter to your agencies, several Banking Committee republicans and i urged your agencies to revise the volker rule, including to address the current covered funds overly broad definition. Although your agencies have joined the set proposal volker rule, which is appreciated, it was left relative ly untouched. Revising the definitions overly broad to venture capital. Other longterm investments and loan creation. Separately in september, shortterm borrowing rates spiked as result of 300 billion in treasuries hitting the market. Even in light of Banks Holding a surplus of cash at the fed. 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 at the fed. So why didnt they do that . Some have suggested certain aspects of 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 attack tak steps by lending funds, its important that the fed review the details of its current regulatory and supervisory regime for potential longterm fixes. Now, quickly turning to guidance, senators tillis, purdue, rounds and i asked for its legal opinion as to whether supervision and regulation letters constitute a rule under the congressional rule act. In its october response, gao concluded two of the letters, including one providing a new supervision framework for large Financial Institutions and another related to recovery planning are 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 have not gone through a formal notice and comment rule making. To continue providing more clarity about the applicability of guidance. I encouraged 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 announce aid portion of regulations that would be reviewed as part of the process through which the agency 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 road map for actions 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 libra Digital Currency started by facebook. In july i asked Federal Reserve chairman powell about his understanding of although chairman powell noted it is in contact with other regulatory agencies, he also said that he 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, its potential impact in the marketplace and consider appropriate necessary regulatory responses. It seems that Digital Currencies are inevitable and 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 definitions in the volker rule, especially with longterm investments, how the agencies are thinking through the recent turmoil and repo market and what adjustments may be appropriate for a 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 libra project Digital Currencies, including what the u. S. Regulatory framework in the 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 these issues. Senator brown . Thank you, mr. Chairman. Welcome to the three regulators here. We generally have financing auditors here and he had a conflict today. He is expected to announce changes at the Civil Rights Community and others are very concerned about. I share those concerns. I expect we will have him up before this committee, mr. Chairman, to talk about this proposal and other activities at the occ. Thanks. 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 were a staffer in the senate, whether you were serving at the agency you now lead or whether you were at a private equity firm. You had a front row seat. You can argue about or discuss responsibility. 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, changes that allow wall street to go back to its old tricks that i fear will again cost americans their jobs, their homes, their life savings and reap the kind of devastation in neighborhoods like mine in cleveland the next time complicated bets blow up in bankers faces. What is sometimes harder to see are the schemes that hurt families in the economy, even when they work exactly the way wall street intended them to work. My status is setting of one of those wall street schemes. 12 years ago, just before the financial crisis, giant private equity firm bought a Nursing Home Company based in toledo, ohio, that operated facilities nationwide. Soon that Nursing Home Company was being strangled by debt from the loans. It laid off hundreds of staff. Patients suffered under negligent, horrifying conditions. According to the washington post, staffing cuts meant there werent enough nurses to respond to patients. Health care Health Code Violations rose dramatically in pennsylvania. A patient broke her hip and crashed to the floor when a single staffer tried to do a twoperson job and move her on his own. Patients faced other Living Conditions and no human being should have to endure, waiting in soiled clothing and dirty beds for help that was never going to come. All the while that firm was extracting more and more profits. The Nursing Home Company went bankrupt. That didnt stop the private equity firm from making huge investme profit on their investment. Thats what happens when it works as designed by wall street. Wall street extracts the profits out of the company. The rest of us, workers, patients, families and communities pay for it. Wall street looks for profits anywhere it can find them. These schemes squoez money out of every part of the economy. Its not only health care. Maybe a hospital in philadelphia, pennsylvania, or in massillon, ohio, but its also manufactured communities in iowa. I saw where private equity came in, raised the rent by 50 and people are captive having to live there. Manufactured Home Communities in New Hampshire also, not just harming individual families but entire communities. Imagine how bad it will be if these complex Financial Transactions blow up like the subprime mortgages did in 2008. This is just one of so many challenges working families face. We got a report showing almost half of American Workers are stuck in lowwage jobs. If one thing goes bad in their lives, they lose their home. They would be forced to borrowmoney. You dont work for this president. You dont work for wall street, the banks. You work, in part, for the population that cant come up with 40 of the population that cant come up with 400. More and more families have to borrow to get by credit card debt, student loan debt, mortgage debt, all higher than before the crisis. Wall street squeezes more out of every one of their paychecks, adding to their billions. The regulators job is to protect profits for big banks. Its to protect our economy in their Financial System, ordinary families that the system is supposed to serve, not the other way around. I guess when candidate trump talked about draining the swamp, he really meant the workers and giving wall street free reign as weve seen begin to happen, means retaining workers and prey on them and rein every last cent out of our communities. The president uses his racism, immigrant slander to divide us and distract us from the ways he and his handpicked cronies have betrayed working families. Its not how a democracy should work. If you as the regulators dont stand up for our communities so much in our economy and democracy is at risk. Thank you, mr. Chairman. Thank you. Well now turn to our witnesses and i would ask you to give your remarks in the order i introduced you. We will turn to you first. Mr. Quarrels . Thank you very much. Chairman crapo, Ranking Member brown, members of the committee. Thank you for the opportunity to appear today. My colleagues and i join you on the cusp of a significant and shared milestone, which is the full and faithful implementation of Congress Efforts to improve Financial Regulation in regard to the Consumer Protection act. Ill briefly review the steps weve taken toward this milestone, share the status of the Banking System and discuss the continuing need to ensure our Regulatory Framework is both coherent and effective. The act was an effort to consolidate a decade of work and a specific targeted response in todays banking regulations and their customers. It was also rooted, however in long left knee standing process, aftermath of a crisis shall addressing any gaps and of ensuring that public and private resources go towards their best and most efficient use. The boards latest supervision and regulation report, delivered in connection with my testimony today, confirms we have a stable, healthy and resilient Banking Sector with robust liquidity provisions, stable loan performance, strong loan growth, steady improvements in safety and soundness and several areas of continued supervisory foc focus, including operational resiliency and cyberrelated risks. The Banking System is substantially better prepared to manage shocks today than it was before the financial crisis. Now, when the waters are relatively calm is the right time to examine the efficiency and effectiveness of our protection against future storms. With last years reform legislation, congress made a significant downpayment on that task. And weve implemented all of its major provisions. Earlier this year, we completed a cornerstone of the legislation, tailoring our rules for regional banks and building on our existing work that firms with greater risk should meet Higher Standards and receive more scrutiny. We previously relied heavily on a firms total assets as a proxy for those risks and the cost that the Financial System would incur if a firm failed. This simple asset proxy was clear and critical, rough and ready but neither risk sensitive nor complete. New rules apply a broader set of rules for greater scrutiny and retain the strictest oversight for the largest and most complex firms. We, and our interagency colleagues, have worked on a range of measures to address the issues facing Smaller Banks with particular attention to the Community Bank business model. Our goal through this period of intense regulatory activity, has been to faithfully implement congress instructions. But those instructions also speak to a broader need and one central to our ongoing work, which is to ensure that 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 it was designed, debated, enacted to address a particular set of gnu needs. No rule can ever be truly evergreen. Gaps and areas for improvement will always reveal themselves over time. Our responsibility is to address those gaps without creating new ones, to reduce complexity where thats possible and to ensure that our entire rule book supports the safety, stability and strength of the Financial System. Sensible treatment to new Financial Products in technologies and to clear supervisory communication that reinforces our regulations and laws. Each of these areas in greater detail. Thank you. I look forward to answering your questions. Thank you very much. Members of the committee and fellow staff, thank you for the opportunity to testify today. 18 months ago, i began serving as the 21st chairman of the fdic. During this period, the fdic has undertaken a great amount of work with a particular emphasis on three overarching goals, strengthening the Banking System as it continues to evolve, fdic supervised can meet the needs of consumers and businesses and fosterring Technology Solutions and encouraging innovation at Community Banks and the fdic. Fdic has made significant progress and i appreciate the opportunity to discuss this. To use Banking Industry has enjoyed an extended period of positive Economic Growth. In july, this expansion became the longest on record in the United States. By nearly every metric, the Banking Industry is strong and well positioned to continue supporting the United States economy. While the state of the Banking System remains strong, the fdic is continuing to monitor changes in the industry and further strengthen the Banking System by modernizing our approach to supervision, including outdated regulations and increase in transparency, enhancing resolution preparedness, assessing new and emerging risks and creating the workforce of the future. My written statement details the many actions the fdic has taken in each of these areas. These are steps toward a stronger Banking System, certain areas in which the needs of consumers and businesses must be addressed by more comprehensive reforms. We have been working diligently to update broker deposits, which are put in place over 30 years ago. Provide clarity for banks that meet small dollar needs. Finally, perhaps no issue is more important or more central to the future of banking and frankly the presence than innovation. Technology is transforming the business of banking both in the way consumers interact with their banks and the way banks do business. Regulators cannot play catch up but must be proactive in engaging with stakeholders, consumer groups, trade associations and Technology Companies to help understand and foster safe adoption of technology across the Banking System, especially across Community Banks. Since 1933, fdic has maintained a vital role in the Financial System. This Mission Remains as critical today as it was 86 years ago. If we are to achieve our mission in a modern financial environment, the agency cannot be stagnant. Last year i began with our regulators, consumers and other stakeholders. At the outset of this eff