|12:48 PM EDT||
Scott Garrett, R-NJ 5th
Mr. GARRETT. Mr. Speaker, at this point, I yield myself such time as I may consume.
Mr. Speaker, I rise today in support of H.R. 4167, which is the Restoring Proven Financing for American Employers Act. It was introduced by the gentleman from Kentucky (Mr. Barr), who we will be hearing from shortly. And I would also like to thank my good friend from New York (Mrs. Maloney), the ranking member of the Capital Markets Subcommittee, for her bipartisan and commonsense work on this important issue as well.
Today we have the opportunity to correct, in a strong, bipartisan way, an egregious example of regulatory overreach. For no reason that has been coherently stated by anyone, the banking regulators responsible for implementing the Volcker Rule have included provisions in their final rule that will literally cripple the market for collateralized loan obligations, also called CLOs.
See, at the stroke of a pen, the banking regulators are going to wreak havoc on one of the largest and most important sources of financing for literally hundreds of growing companies across this country. If the CLO provisions in the Volcker Rule go forward as planned, there will be a heavy price to pay in failed companies and also lost jobs.
So why is the government doing this? Did CLOs do anything to cause the financial crisis? No, they did not. Are CLOs a menace to the stability of our financial system? No, again. Is the small proportion of securities included in some CLO structures a national crisis that requires such a heavy hand by the Federal Government? Of course not.
Thankfully, the bill we have today, introduced by my friend from Kentucky (Mr. Barr), fixes this problem of the banking regulators' own making. First, it prevents a disastrous fire sale of suddenly impermissible legacy CLOs. Second, it narrows the Volcker rule's absurdly broad definition of an ``ownership interest'' in a CLO.
Last month, the Financial Services Committee passed this bill on an overwhelmingly bipartisan basis, with all but three members of the committee voting in favor of it. The Independent Community Bankers of America and the American Bankers Association have all voiced their support as well.
I am sorry, though, that it has come to this. You know, time and time again the committee has admonished the banking regulators that the CLO provisions of Volcker were a threat to the economy and to the financial stability that they are supposed to be protecting. Time and again, however, the unwieldy banking regulators chose to do nothing. If they had corrected this problem as we have been urging them to do and which they could do, we would not be here wasting valuable legislative time saving
the CLO market from our own public servants.
Now, some have suggested that the agencies don't have the legal authority to fix the problems. It is interesting that Federal agencies always seem to have plenty of authority when it comes to doing something, but when they need to fix something that they messed up, well, suddenly they have no authority.
Perhaps the real problem is the fact that we have so many different banking regulatory agencies in the first place. If coordinating these agencies to avoid a regulatory train wreck is too difficult, then maybe we need fewer agencies.
I have spoken before about the proliferation of government regulators with authority over our financial markets. More regulators mean more wasteful duplication of functions, more regulatory confusion, more empire building, more bureaucratic rivalry, less accountability, and less problem solving.
An ever increasing number of agencies with ever increasing authority only makes our financial system more unsustainable and more arbitrary and more unstable, and it makes it all the more likely that the heavy-handed government will fall suddenly on some unlucky corner of the economy.
So it is my hope that this body can come together now and support this bipartisan piece of legislation so that we can ensure that the market for collateralized loan obligations, CLOs, is not carelessly and needlessly destroyed. While they may not have a high profile, CLOs provide a valuable function that our recovering economy cannot do without, and I urge my colleagues for that reason to support H.R. 4167.
And at this time, I will reserve the balance of my time.