Hearing Entitled: Regulatory Overreach: The Price Tag on American Prosperity
House Financial Services Subcommittee on Monetary Policy and Trade
2025-04-29
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Source: Congress.gov
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The Subcommittee on Financial Institutions will come to order. Without objection, the chair is authorized to declare a recess of the committee at any time. This hearing is titled Regulatory Overreach, the Price Tag on American Prosperity. Without objection, all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record. I now recognize myself for four minutes for an opening statement. I want to first thank our witnesses for being here today for the first of many in-depth hearings on the importance of supporting community financial institutions. The committee's first hearing of the 119th Congress laid the foundation for what we aim to accomplish in the Financial Institution Subcommittee, this Congress. During that hearing, we heard from regulatory experts and community bankers who are being crushed by the weight of burdensome and politically driven regulations from federal bank regulators. Community banks are the lifeblood of our local economies and serve as critical support for small businesses, particularly in rural and underserved areas. Unfortunately, these community banks were swept up in the regulatory overhaul of Dodd-Frank 15 years ago, despite not contributing to the financial crisis. The one-size-fits-all approach to regulation created by Dodd-Frank ignores the unique business models and size of these local institutions and impresses unnecessary compliance costs upon them. In 2018, Congress acknowledged the need to adjust regulations on financial institutions that reflect their associated risk profile and lending strategies. This led to the passage of the Bipartisan Economic Growth Regulatory Relief and Consumer Protection Act, or S2155. This was a monumental step in recalibrating our federal bank regulation framework toward a more dynamic risk-based approach that does not impose excessive compliance burdens on small or less complex financial institutions.
Unfortunately, Democrat-appointed regulatory officials under the Biden administration abandoned the bipartisan policy approach of tailoring in favor of a uniform subjective-based approach. We saw this firsthand with the interagency rulemaking on Basel III Endgame, a partisan campaign led by former Vice Chair of Supervision at the Federal Reserve that moved away from risk-based tailoring and required small, less complex institutions to follow the same rules as the largest globally systemic important financial institutions. Fortunately, due to the overwhelming number of negative comment letters and pushback from legislators on both sides of the aisle and both chambers of Congress, this de facto rollback of S2155's tailoring was not finalized. Last Congress, we advanced several bipartisan bills that reassert congressional oversight over the kinds of agreements regulators strike with global governance groups, such as the Network for the Greening of the Financial System, or the NGFS. This proved to be successful as our prudential regulators have since pulled out of the NGSF. NGFS. Several bills attached to today's hearing advance regulatory tailoring and maintain Congress's Article I authority over these agencies. I've heard from community bankers across the country about the inconsistency and lack of clarity in the supervision and examination framework being driven by partisan bureaucrats in Washington. Rather than our prudential regulators working alongside supervised institutions to ensure compliance, we've seen a shift to promoting agendas such as climate-related finance or the debanking of legally operating businesses, dangerous deviations from the core mission and purpose of the agencies. For example, we've seen regulators hand out supervisory determinations based on novel interpretations of longstanding laws without providing a meaningful appeals process. Without any due process, these covered institutions are constantly held in limbo while they await the next press release that attacks their legal business strategy. This hearing will examine how Congress can direct bank examiners to use objective risk-based metrics in their examination process.
specifically regarding the Campbell's framework and the abuse of the management component that has hindered otherwise compliant firms. I look forward to hearing from our witnesses about Congress's role in supporting an objective risk-based regulatory and supervisory framework that works for all Americans, the importance of regulatory tailoring, and the need to protect the U.S. financial system from overreach by global governance groups. I yield back, and the chair now recognizes the ranking member of the subcommittee, Dr. Foster, for four minutes for an opening statement.
Thank you, Chairman Beyer, and thank you to our witnesses. Over the last 100 days, President Trump's policies have triggered a wave of uncertainty for the financial system and for Americans in all walks of life. On-again, off-again tariffs, mass firing of federal civil servants, and unlawful attacks on what should be independent agencies like the Federal Reserve have made it impossible for small businesses to plan, injected volatility into our financial markets, and weakened the US dollar. On the campaign trail, President Trump claimed that he would lower prices for Americans on day one with policies like capping credit card fees at 10% and reinstating Glass-Steagall. Really, I don't see any of that here today, just chaos. 100 days in, more than 60% of Americans disapprove of the president's handling of the economy. Nearly 90% expect the new tariffs to increase prices. Two-thirds of Americans say that they fear a recession. And banks, large and small, are hearing from the businesses that they support that these businesses have no idea how they will survive the chaos, the cost, and the supply chain disruption from Trump's tariff tantrums. I support some of the legislation being put forward at this hearing, like the Home Buyers Privacy Protection Act, which will protect the privacy of mortgage applicants and prevent them from being bombarded by unwanted solicitations and scams. Our witnesses bring thoughtful perspectives on banking supervisory and examination processes, and I look forward to discussing their recommendations with them today. And I believe there are real opportunities, for example, to use technology to streamline bank supervision. But I was elected to Congress and joined this committee in March of 2008, on the eve of the global financial crisis. On this committee, we surveyed the wreckage from excessive risk-taking from large financial firms, predatory mortgage lending practices, and other market excesses that brought the global economy to the brink of collapse. And all of this was due to ill-advised financial deregulation. And I would note, interestingly, that while there are several Democrats on this subcommittee that were in Congress at that time, Representatives Lynch, Sherman, Meeks, Scott Green, zero Republican members of this subcommittee were.
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