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Patrick Erin Murphy, D-FL 18th
Mr. MURPHY of Florida. Mr. Speaker, I yield myself such time as I may consume. [Page: H3258]
Mr. Speaker, I rise in support of H.R. 4167, to create jobs and prevent unintended consequences of the Volcker Rule, which I strongly support.
The bill before us represents a truly bipartisan compromise that balances the author's goal to preserve a proven financing mechanism with democratic concerns against watering down the Volcker Rule, which is designed to prevent banks from gambling on Wall Street with consumer deposits, the very type of behavior that nearly took down our financial system and gave us the Great Recession.
The truth is the Volcker Rule is not intended to capture debt. Debt is an everyday tool of plain vanilla financial institutions. No, the Volcker Rule is about equity ownership. We don't want banks owning hedge funds and private equity funds, but of course we still want banks out in the communities lending to the real economy.
I want to thank the gentleman from Kentucky and the
gentlelady from New York (Mrs. Maloney) for working together on a compromise that makes a narrow, commonsense fix to the Volcker Rule without undermining its core purpose: prohibiting risky proprietary trading by federally insured banks.
I also want to recognize Chairman Hensarling and Ranking Member Waters for the truly bipartisan way this bill came to the floor by a vote of 53-3. I am hopeful that we will see more bipartisanship from our committee on the business of the American people: comprehensive community bank regulatory relief, TRIA, reauthorizing the Export-Import Bank to help American job creators access foreign markets, and reforming Fannie Mae and Freddie Mac to protect taxpayers without undermining
the housing market and preserving the 30-year fixed rate mortgage for middle class families.
The bill before us would simply clarify that the right to vote to remove a CLO manager in traditional, creditor-protective circumstances, such as a material breach of contract, does not, by itself, convert a debt security into an equity security under the Volcker Rule.
It would also provide narrow relief to existing CLO securities as long as they qualify as debt under this bill. For CLOs that are not debt securities under this bill, banks will get an additional 2 years to divest, which will prevent a disruptive fire sale of these securities and cost as much as $8 billion.
At this time, I will insert the text of a letter from the Independent Community Bankers of America into the Record.
BANKERS OF AMERICA,
Washington, DC, April 28, 2014.
House of Representatives,
DEAR MEMBER OF CONGRESS: On behalf of the more than 6,500 community banks represented by ICBA, I write to express our support for the Restoring Proven Financing for American Employers Act (H.R. 4167), which will be considered on the House floor this week. Introduced by Rep. Andy Barr, H.R. 4167 will allow community banks to retain debt securities of collateralized loan obligations (CLO) issued before January 31, 2014. The Financial Services Committee reported H.R. 4167 by a nearly unanimous
vote in March.
As you may know, the final Volcker Rule implementing a provision of the Dodd-Frank Act, issued December 10, requires banks, including community banks, to divest their holdings of CLOs by July 2015. Though the compliance date was later extended, this requirement could cause a significant, immediate and permanent loss of capital for community banks that hold these securities and are still recovering from the financial crisis. H.R. 4167 would avert this damaging and unanticipated outcome by repealing
the divestment requirement for CLOs issued before January 31.
ICBA urges you to support H.R. 4167. Thank you for your consideration.
Camden R. Fine,
President & CEO.