In a hearing before the House Financial Services Committee, Chairman Patrick McHenry (R-N.C.) addressed leaders from the Federal Reserve, the Federal Deposit Insurance Co. (FDIC), the National Credit Union Administration and the Office of the Comptroller of the Currency.
“The era of post-financial crisis regulation is over,” McHenry stated in his opening remarks. “For the past decade, your agencies have worked to push credit risk out of the banking system. At the same time, you completely missed the interest rate risks on bank balance sheets. This led to three of the largest bank failures in American history last year.
“Time and again, your agencies have also worked to stifle the beneficial role that innovation and technology play in our financial system,” he continued. “It’s clear our banking regulators, under Democrat leadership, have been busy fighting the last war. Your backward-looking approach to regulation has harmed our financial system, innovation, and consumers.”
McHenry called for new, technology-based solutions to strengthen the country’s financial system, help consumers, and prioritize efficiency. He accused the agency leaders of failing to work with Congress in finding answers to current financial issues, as well as engaging in rulemaking that extended beyond the regulators’ statutory authority.
Notably, the only legislation listed on the committee memorandum was a House resolution demanding FDIC Chairman Martin Gruenberg be removed from his position, effective immediately, based on reports of a toxic work culture being cultivated under his leadership.
Rep. Maxine Waters (D-Calif.), committee ranking member, criticized the Republicans for demanding Gruenberg be removed, while staying silent on Rep. Matt Gaetz (R-Fla.), who was being investigated for sex trafficking, being nominated for U.S. attorney general. Gaetz has since declined to be considered.
“We know what the future holds: Trump and his appointees will seek to gut guardrails that keep Wall Street, megabanks, and crypto in check,” Waters said in her opening statement. “They will rubber stamp bank mergers to allow big banks to get even bigger and give a free pass for banks to charge billions of dollars in new junk fees. And in a Trump administration, where there will be no one to hold these big banks accountable, as Project 2025 promises to eliminate the only watchdog that focuses solely on our nation’s consumers in the financial marketplace, the Consumer Financial Protection Bureau.
“Working families have said that the cost of living is too expensive, and affordable housing is out of reach, but we know that critical housing programs will be cut and housing costs will skyrocket,” she continued. “Small-businesses that barely survived the pandemic will be crushed by Trump’s new taxes, while major corporations will pass the increased costs of goods onto the American people. And after the military is deployed to deport millions, prices will climb even higher without workers in agriculture, construction, and other industries that rely on immigrant labor. Implementation of Trump’s policies will bring back inflation at the same time he is trying to abolish the one government agency charged with protecting against inflation: the Federal Reserve. This is not what the American people voted for.”
For full coverage of the hearing, check out our sister publication, Dodd Frank Update.