Comment on House Financial Services banking bills Sept. 16 2024

The Honorable French Hill, Chair
The Honorable Maxine Waters, Ranking Member
Honorable Members
House Financial Services Committee
Washington, DC 20515

Re: Mark-up September 16, 2025, on various banking bills

Dear Committee members,
On behalf of more than 500,000 members and supporters of Public Citizen across the country, we offer the following comment on the package of bills slated for mark-up September 16, 2025. We oppose most of these bills, including one that terminates all unused authorities from the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act; another that stymies oversight of systemically important nonbank financial institutions; a pair of bills that would further facilitate evasion of the deposit insurance limits; and legislation that erodes solvency standards. We address the bills in ascending bill number.

H.R. 2478, the Financial Exploitation Prevention Act helps protect seniors from financial exploitation by postponing the date of payment upon redemption of certain securities. The bill allows certain qualified companies to adopt safeguards in delaying transactions if they reasonably believe financial exploitation is occurring or has been attempted. We enthusiastically support this bill.

H.R. 3234, (unnamed) amends the Federal Deposit Insurance Act to modify the amount of reciprocal deposits of an insured depository institution that are not considered to be funds obtained by or through a deposit broker. Deposit brokering perverts the principle of limited federal insurance. We oppose efforts to facilitate this evasion of existing limits and oppose this bill.

H.R. 3484, the Business Owners Protection Act terminates authorities of the Securities and Exchange Commission (SEC) that were established pursuant to Dodd-Frank but not yet implemented. This breathtaking effort to deny the reforms Congress approved following the great Wall Street crash of 2008 deserves no responsible attention. We oppose this bill.

H.R. 3682 the Financial Stability Oversight Council Improvement Act throws another roadblock in the path of alert financial overseers to designate a nonbank financial institution as “systemically important,” and therein, worthy of heightened scrutiny. We oppose this bill.

H.R. 5262, the Bank Competition Modernization Act reduces the ability of regulators to block harmful mergers by requiring that additional competition factors from outside the industry be considered. Washington already approves too many bank mergers and should not open the door to other harmful combinations. We oppose this bill.

H.R. 5270, the Stress Testing Accountability and Transparency Act requires the Federal Reserve Board to jeopardize the integrity of the bank stress test by pre-publishing the scenarios it will use. It also prohibits climate-related stress tests for nonbank financial companies. We oppose this bill.

H.R. 5276, the Community Bank LIFT Act dilutes “capital” or “solvency” standards by about 25 percent. Solvency standards are already too low. To expand, the industry and regulators deploy the misleading term “capital” when describing this arena. Capital means the difference between assets and liabilities. “Solvency” more accurately describes this difference. By using the term “capital,” bank risk apologists conjure an image of stacks of cash idling in some vault, unused for anything productive. Instead, bankers deploy capital along with borrowed funds, such as bank deposits or loans from bonds the bank issues. Public Citizen contends that banks should deploy funds to worthy borrowers, and those funds should be comprised of at least 20 percent of the bank’s own capital, and no more than 80 percent of funds borrowed from the bank’s depositors and other creditors. Further, we oppose risk-weighting. We explore this more fully in the Public Citizen book “TOO Big” and our comment in 2023 regarding solvency reforms. We oppose this bill.

H.R. 5291, the Merchant Banking Modernization Act would further breach the wall between banking and commerce. This time-honored principle of separating the loan-makers for the loan-seekers should not be ruptured We oppose this bill.

H.R. 5317, the Community Bank Deposit Access Act declares that brokered deposits will be acceptable in certain situations provided they do not exceed 20 percent of an institution’s total liabilities. This applies to institutions under $10 billion in assets. As noted above, limits on federal insurance of deposits should be respected, not gamed. We oppose this bill.

H.R. __, the Kleptocracy Asset Recovery Rewards Program Act establishes a Treasury-based rewards program to incentivize identification of stolen assets that are linked to foreign government corruption. The program rewards whistleblowers from the proceeds of the recovered stolen assets. We support this bill.

In conclusion, with two exceptions, we oppose the bills slated for mark-up September 16, 2025. This committee should work to ensure that banks operate safely, not on the razor’s edge of insolvency. With a president guiding the nation towards recession, we will need a healthy financial sector to weather this storm.
For questions, please contact Bartlett Naylor at bnaylor@citizen.org,

Sincerely,

Public Citizen