April 14, 2020 - Issue: Vol. 166, No. 71 — Daily Edition116th Congress (2019 - 2020) - 2nd Session

[Extensions of Remarks]
[Pages E364-E365]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            INTRODUCTION OF THE SYSTEMIC RISK MITIGATION ACT

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                     HON. JESUS G. ``CHUY'' GARCIA

                              of illinois

                    in the house of representatives

                        Tuesday, April 14, 2020

  Mr. GARCIA of Illinois. Madam Speaker, I rise today to introduce the 
Systemic Risk Mitigation Act with my colleague, Representative Katie 
Porter of California.
  ``Shadow banks'' are large, interconnected and complex firms--they 
include insurance companies, hedge funds, asset managers and others--
that drive many of the risky practices that economists and regulators 
have warned about for years. The Trump Administration's deregulatory 
approach only puts us at greater risk. And as the public health crisis 
brought on by COVID-19 drags our country into a recession and threatens 
to ignite underlying problems like corporate debt, it is up to Congress 
to ensure that regulators address the risks these firms pose to our 
financial system before it's too late.
  Since Trump took office, AIG and Prudential Financial have been de-
designated as systemically important and now no non-banks currently 
carry that designation. Shadow banks like these two are central to our 
financial system, but by avoiding the designation of ``systemically 
important'' they escape oversight requirements such as strong capital 
and liquidity rules and annual stress tests.
  Our bill strengthens the Financial Stability Oversight Council (FSOC) 
and the Office of

[[Page E365]]

Financial Research (OFR), regulators created by Dodd-Frank, to identify 
and mitigate systemic risks in the financial system. The Systemic Risk 
Mitigation Act:
  Automatically designates shadow banks above a certain size and 
riskiness as ``systemically important.'' These large, complex, and 
interconnected shadow banks would be subjected to strong capital and 
liquidity rules, annual stress tests, living wills requirements, and 
other crucial safeguards;
  Provides a process for de-designation of firms that are found not to 
meet the standard of systemic importance;
  Strengthens the FSOC by giving the Council rule-making authority to 
address systemically risky activities across the financial system;
  Provides the FSOC and OFR with more resources and increases their 
transparency;
  Creates a Climate Risk Subcommittee of the FSOC to assess the risk 
posed by climate factors to the stability of the U.S. financial system.
  I urge this body to advance this legislation.

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