Protecting Consumers and the Dodd-Frank Act
Maxine Waters, House Financial Services Committee Chair
with introduction by Michael Masters, Co-Founder and Chair, Better Markets
Dodd-Frank Act 10th Anniversary Conference
Tuesday, July 21, 2020, 1-5 p.m.
TRANSCRIPT of Video
Thank you, Ms. Raskin, for sharing those unique perspectives from your time at Treasury, on the Fed Board and before. You’ve given us a lot to think about.
The same will be true of our next speaker, no doubt. She is another one of our guests today who really needs no introduction. However, it is my pleasure to tell you a little about Chairwoman Maxine Waters before she makes her remarks.
Considered by many to be one of the most powerful women in American politics today, she has gained a reputation as a fearless and outspoken advocate for women, children, people of color and the poor. No matter where she is or what she is doing, you can be sure she is thinking about and fighting for the most important American values of fairness, equality, dignity, hope, respect and speaking truth to power.
Everyone who has ever met her or knows her work can see her passion and commitment. That’s why Chair Waters was elected in November 2018 to her 15th term in the U.S. House of Representatives with more than 70 percent of the vote in the 43rd Congressional District of California.
In January of 2019, Congresswoman Waters made history as the first woman and first African American Chair of the very powerful House Financial Services Committee. Her priorities and values are reflected in the work of the Committee, which she reorganized upon becoming Chair, including establishing a Subcommittee on Diversity and Inclusion as well as one focused on Oversight and Investigations.
Under her leadership, the Committee is now firmly on the side of hardworking Americans, consumers, investors and Main Street families who need a banking system that supports them and the real productive economy. She has also led the charge for accountability of the financial industry and those who are supposed to regulate it and enforce the law without fear or favor.
Before becoming Chair, Congresswoman Waters was the ranking member of the Committee since 2013. In that capacity, she was a steadfast and effective defender of the Dodd-Frank Act, which was under relentless attacks seeking to weaken or kill it. At the same time, she was proposing additional financial reforms to protect America’s workers, consumers, investors and Main Street families. Prior to that, she fought for robust financial reform and was a leader in the efforts that resulted in the Dodd-Frank Act.
She has also led congressional efforts to mitigate foreclosures and keep American families in their homes during the housing and economic crises, notably through her prior role as Chairwoman of the Subcommittee on Housing and Community Opportunity. She authored the Neighborhood Stabilization Program, which provides grants to states, local governments and nonprofits to fight foreclosures, home abandonment and blight and to restore neighborhoods.
An integral member of Congressional Democratic Leadership, Congresswoman Waters serves as a member of the Steering and Policy Committee and is the Co-Chair of the bipartisan Congressional Task Force on Alzheimer’s Disease. She is also a member of the Congressional Progressive Caucus and member and past chair of the Congressional Black Caucus.
I could go on, but her list of accomplishments and activities are far too long. So, without further delay, please join me in welcoming Chairwoman Maxine Waters.
Thank you very much and thank you for that very generous introduction. I am so pleased and delighted that I was asked to participate today in the 10th anniversary of Dodd-Frank. As you know, this legislation is a serious part of my career and legislation that I consider has done the very most for consumers—in any Congress that has ever attempted to deal with the issues of the financial services community.
So, I’m very pleased to join you for this event celebrating this 10th anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act. I would like to thank Better Markets’ President and CEO Dennis Kelleher for inviting me to speak to you today, and Better Markets’ Chairman, of course, Michael Masters for that introduction.
I’m very proud of the work that my colleagues and I did to pass the Dodd-Frank Act following the global financial crisis of 2008. At that time, millions of families had lost their homes to foreclosures, driven by unregulated, abusive, predatory lending. The catastrophic Great Recession also resulted in trillions of dollars in lost wealth and massive job losses. In Congress, Democrats took decisive action to ensure that consumers, investors and the economy would be better protected from a future crisis.
This landmark law made significant reforms on a wide-range of policy fronts, including creating the financial stability oversight council, that is FSOC, and enhancing prudential standards for the largest financial institutions—to impose robust capital liquidity, leverage stress testing and living will requirements. Dodd-Frank also cracked down on risky speculative trading by establishing the Volcker Rule and created a new regulatory regime for the previously unregulated derivatives market, and importantly, we reformed the mortgage market and eliminated certain predatory products. At the centerpiece of the law, we established the Consumer Financial Protection Bureau to ensure that consumers would have an independent watchdog to protect them from abusive financial products and practices.
Under Democratic leadership, the consumer bureau was widely successful, putting millions of dollars back in the pockets of hard-working consumers who had been ripped off, and stopping many abusive acts by financial institutions. But despite all of these successes, there are those who still want to return to the bad old days where consumers did not have a watchdog looking out for them, and predatory lending was allowed unchecked.
I became the ranking member of the Financial Services committee following Barney Frank’s retirement; as such, the baton of chief defender of Dodd-Frank fell to me. Jeb Hensarling was chairman of the committee, and he was committed to rolling back as much of Dodd-Frank as possible. He held many hearings claiming Dodd-Frank was hurting businesses and Wall Street. He refused to hear the testimony of the CFPB director; he passed dozens of bills through the committee to gut Dodd-Frank; he did everything he could to undermine, eliminate and roll back Dodd-Frank.
The Democrats on the committee and I were the last line of defense. We took that responsibility seriously; we fought back in hearings, we challenged him in markups, and we tried to be united on the floor. We were never more united than when Hensarling tried to pass what we called the wrong choice act—a bill that would have paved the way back to the financial crisis. The legislation, which was Hensarling’s signature bill, would have functionally terminated the consumer bureau, weakened important financial stability safeguards and repealed the orderly liquidation authority, which is the mechanism we put in place in Dodd-Frank to prevent future bailouts and ensure that large financial institutions can fail safely.
Among other harmful provisions later that year, the voters of this country spoke out and demanded a change in leadership in the House of Representatives. When Democrats took over, I made it clear that the committee’s days of weakening regulations and putting our economy at risk of a financial crisis were over. Shortly after I said that, bank shares failed by 0.6; Wall Street knew that I meant business as the chairwoman of the House Financial Services Committee. I’m at the forefront of not only protecting the important reforms we put in place in Dodd-Frank but also of improving upon the law to provide additional protection for consumers.
President Trump promised to do quote “a big number” on Dodd-Frank in his first few days in office, and I’m proud to say that that hasn’t happened on my watch. Under my leadership, the deregulatory bills that made the committee known as quote “the juice committee,” in which special interests drafted legislation directly for members, are now dead on arrival in the House of Representatives. Instead, we have focused on supporting and protecting consumers, investors and the economy.
My leadership of the committee is historic: I am the first woman and the first person of color to ever wield the gavel in the Financial Services Committee. However, my leadership of the committee is also historic because of the important legislation we have moved to push back against Trump’s attempts to unravel (the) Dodd-Frank Act and the legislation we have passed to improve upon Dodd-Frank and to expand consumer protections. Trump’s political appointees to the consumer bureau have worked hard to rewrite the strong consumer protection regulations finalized by former Director Cordray, and the Trump administration has also worked to compromise the agency’s independent structure.
It is for that reason last year that I advanced legislation called the Consumers’ First Act, that is HR 1500, to block the Trump administration’s anti-consumer agenda and reverse their efforts to undermine the mission of the consumer bureau. The legislation, which passed the house in May of 2019, reverses many of the structural reforms Trump appointees have made to undermine the CFPB, including restoring the office of fair lending and equal opportunity; limiting the number of political appointees at the agency; directing the consumer bureau to promptly resume military lending act exams after Mulvaney stopped the agency from supervising its regulated entities for compliance with the military lending act; and requiring that the agency’s helpful consumer complaint database remains publicly accessible.
So, there is transparency about the concerns (that) consumers face every day in the financial marketplace. Under my leadership, the financial services committee has also conducted rigorous oversight of Trump appointees to the financial regulatory agencies, including the consumer bureau. For example, last year following an extensive committee investigation, we released a majority staff report entitled “Settling for Nothing: How Kraninger’s CFPB Leaves Consumers High and Dry.” The report presented evidence that the Trump administration’s politicization of the consumer bureau has led to a decline in the consumer bureau’s redress for harmed consumers in enforcement actions.
The committee has also highlighted the consumer boosters that arise from payday lending, rent-a-bank schemes and other predatory forms of lending, and we have fought every effort by …Trump appointees who have sought to relax key consumer safeguards. I’ve also worked to pass legislation to provide additional consumer protections, including by advancing HR 3621, the consumer credit act sponsored by Representative Presley and containing bills also sponsored by Representatives Adams, Beatty, Lawson, Lynch and Talib to make essential comprehensive reforms to the nation’s broken consumer credit reporting system, which passed the house in January 2020.
Last month, the House also passed bipartisan legislation sponsored by Representative Gothelmer; HR 5332, the Protecting Your Credit Score Act, to provide easier access and stronger protections for consumers in our credit reporting system. So, I want to bring up the fact that I created something called AM_WISE in Dodd-Frank and the DNI subcommittee. I’m particularly proud of my contributions to Section 342 of the Dodd-Frank Act, which required most of the federal financial agencies and each of the federal reserve banks to establish offices of minority and women inclusion, known as again AM_WISE. AM_WISEs are designed to, among other things, collect and report on diversity data from their regulated entities, thereby holding them accountable for diversity and inclusion results. In addition to the creation of the AM_WISE, I have continued to create accountability for diversity and inclusion.
One of my very first acts as chairwoman was to create a historic subcommittee on diversity and inclusion. Through this subcommittee, we’ve held hearings on the lack of representation of women and minorities in the financial sector, board diversity, the racial and gender wealth gap, diverse asset management, the lack of diversity in America’s largest banks, among many other important topics. We’ve also passed strong diversity legislation, including bills to require companies to disclose the demographics of their boards and c-suite executives and to require federal reserve banks to consider diverse candidates when filling bank president vacancies. Subcommittee Chair Beatty and I released a staff report on bank diversity data, making further recommendations on why banks and others must make diversity and inclusion a priority in their employment pipeline, on their boards and with suppliers.
The Dodd-Frank Act set the stage, and I’m continuing to work for the inclusion of women and people of color, especially in the midst of this pandemic, that has been shown to be more disproportionate to affect them, and so in the early weeks of the pandemic crisis, I convened a call with members of the committee, and the CEOs of our nation’s largest banks to question them about their response to the pandemic. On that call, we repeatedly heard from the CEOs that Dodd-Frank’s enhanced potential standards had put them in a strong position to weather this pandemic, provide forbearance and continue serving their customers. These comments at a moment of crisis reaffirm that Dodd-Frank has served a critical purpose in making our financial system stronger and providing stability when times get tough.
That represents real progress, and it bolsters my resolve to fight deregulatory efforts to roll back these safeguards. I am now focused on making sure that the mistakes of the last crisis and recovery are not repeated. Leading into the 2008 crisis, communities of color were targeted and and steered into predatory loans. With black and latinx families disproportionately losing their homes to foreclosure, we’re now seeing the disproportionate impact that this coronavirus crisis is having on communities of color both on the health front and economic fronts. During this unprecedented crisis, it is critical for congress to recognize that the focus should be on both providing and ensuring equal access to relief.
I’m working with my colleagues in Congress to not only provide relief to consumers but we’re also focusing on how to ensure that communities of color and low-income communities have access to new and existing relief efforts. For example, in addition to passing unprecedented legislation to respond to the pandemic, my committee has repeatedly convened virtual meetings and calls with both the chairman of the Fed and Treasury Secretary to urge administrative changes, so that programs like the Paycheck Protection Program and Main Street Lending Facility are open and accessible to minority-owned businesses, and we have been successful, including securing set-asides for community lenders who cater to communities of color.
In the 2008 crisis, financial institutions got bail outs but millions of families on Main Street lost everything through no fault of their own. Unfortunately, we’re again on the premises of economic disaster. We are now seeing a situation in this pandemic crisis where the stock market has recovered its initial losses largely because of the Fed’s efforts to pump in trillions of dollars to the markets, but families across the country are suffering again through no fault of their own. Fully half of Americans are not working, one-third of renters could not pay rent in July and nearly one-tenth of homeowners have received forbearance. Nevertheless, the initial protections put in place in March—unemployment insurance, eviction and foreclosure moratoriums and economic stimulus payments—are expiring or have been spent.
Families everywhere need immediate help, and my committee and House Democrats are deeply committed to making sure that Congress takes action to provide additional relief to families and prevent a wave of evictions, foreclosures and economic suffering.
So, I want to thank you again for inviting me to discuss Dodd-Frank on the 10th anniversary of the law. As chairwoman of the Financial Services Committee, I’m working every day to make sure that the reforms that we enacted in Dodd-Frank are not weakened, and that consumers, investors and the economy are protected.
I cannot end my comments with you today without thanking Barney Frank. Barney Frank served as one of the greatest leaders of this Congress, and I considered him as having mentored me. Without Barney Frank, I don’t think I ever would have become the chair of the Financial Services Committee. I learned more in the time that I worked with him than I’ve learned on any other subject in my life, and I’m thankful to Barney for that. So, thank you all again for inviting me.