Systemic Risk Designation Improvement Act of 2016

Floor Speech

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Mr. BARR. Mr. Speaker, I rise in strong support of H.R. 6392, the Systemic Risk Designation Improvement Act, and I applaud the gentleman's excellent work on this bill.

The ranking member, my friend, says that this is not about Main Street. Let me talk about what this bill is trying to fix, the problem we are trying to solve here.

Dodd-Frank, the legislation that my friends on the other side of the aisle are defending, has produced this: small-business lending from banks is at the lowest level it has been in 20 years, and more than 75 percent of corporate treasurers in this country say that Federal regulations are stifling access to financial services. As a result, new business formation in this country is at a 35-year low.

This bill is about Main Street because Main Street cannot access financial services because of Dodd-Frank. This bill is about fixing an arbitrary provision in the Dodd-Frank law that harms consumers and does absolutely nothing to stabilize markets.

Dodd-Frank directs the Financial Stability Oversight Council to designate banks as systemically important financial institutions, or SIFIs. These designated institutions are subject to surcharges, additional regulation, and an implicit taxpayer bailout. That's right, their bill is what gives Wall Street a bailout.

What we are saying is: let's focus our attention on Wall Street, but let's get regional banks some regulatory relief so that they can serve their customers on Main Street.

The primary test for systemic importance is an arbitrary threshold of $50 billion. Above that line, an institution is designated systemically important or too big to fail. Above that line, regardless of the institution's risky activities, it is exempt.

This bill that we are supporting does away with this blunt threshold and directs FSOC and its constituent agencies to consider the institution's actual activities to determine if it actually is risky.
If it is not, it deserves relief so that it can serve its customers better.

Size is not the only issue. It is interconnectedness. It is risky activities. Many of these regional banks that serve my constituents in central and eastern Kentucky, not Wall Street--central and eastern Kentucky. Farmers, small business owners, and homeowners in Kentucky are being crushed and denied access to capital because of a one-size- fits-all regulation from Washington.

Unlike Dodd-Frank's arbitrary approach, this will better promote financial stability because it actually targets the enhanced regulation to where it belongs and not on Wall Street.

The bottom line is, we are hearing from regional banks around this country, in central Kentucky and other places, that the expense of complying with these enhanced regulations and the SIFI surcharge means less capital for deployment in mortgages, in automobile loans, and in small business loans, it means higher credit card rates, and it means fewer customer rewards. It impacts these institutions' ability to engage in philanthropy and community development activities.

Treating these regional banks as complex Wall Street firms is simply illogical. These are not multinational Wall Street firms. These are traditional banks that serve Americans on Main Street.

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