March 28, 2014

Back Bay Tragedy

My thoughts and prayers are with the families of Lieutenant Edward Walsh and Firefighter Michael Kennedy who perished in Wednesday’s deadly Back Bay fire. The deaths of those two brave men were a tragic reminder for all of us that our first responders put their lives on the line for us every day.

Too Big To Fail

This week, the Federal Reserve released a series of studies on one aspect of the too-big-to-fail debate. According to Fortune magazine, the Federal Reserve stated that “the nation's largest banks borrow more cheaply, and take on more risks, than smaller banks and non-financial firms of all sizes, based on the belief that if anything goes wrong, the government will bail them out.” According to the Federal Reserve, the total savings reaped by the six largest banks equals $8.5 billion per year (other studies have come up with larger amounts).

The actual amount matters less than the simple fact that the market believes the government will bail out large banks that take excessive risk and then fail. This belief creates a competitive advantage and encourages risky behavior, which increases the risk of future bailouts. I believe that the impact of this market perception is dangerous, provides an unfair competitive advantage, and encourages risky behavior. Congress should act to level the playing field and protect both taxpayers and the world economy.

Last year I filed H.R. 2266, the Subsidy Reserve Act, which would create a market-based solution to this situation. Simply put – any bank that the market perceives as “too big to fail” would be required to increase its capital reserves by the amount of the unintended market subsidy. This amount would not be available to shareholders or management as long as the bank enjoys the benefit.

The increased capital reserves would be available if the bank did run into trouble, which protects taxpayers and the economy. It would also create a large pool of money that shareholders could decide to distribute. But the only way those funds could be freed up for distribution would be for the bank to shrink its size so it is no longer perceived as “too big to fail”. Again – taxpayers and the economy are protected. This approach involves no government intervention. All aspects are market driven. If a bank chooses to grow then that bank would be responsible for protecting against significant loss, not taxpayers. I wanted to share with you a recent American Banker article that focuses on my legislation: http://www.americanbanker.com/bankthink/the-brilliant-solution-to-tbtf-no-one-is-talking-about-1066524-1.html

Stream Protection

On Tuesday the House considered H.R. 2824, the Prevent Government Waste and Protecting Coal Mining Jobs in America Act. House Democrats have described this bill as the “No Stream Protection Bill”, because that’s the more accurate title. Debris from coal stripped from mountaintops has caused significant environmental damage throughout the Appalachian region of our country, resulting in the loss of more than 2,000 miles of streams that were buried under this debris. It has also destroyed wildlife habitats, compromised drinking water and led to flooding. In December of 2008, just before leaving office, the Bush Administration weakened rules that had been in place since the Reagan Administration. Those rules were implemented to protect streams at risk from coal mining waste. That 2008 rule was challenged in court and vacated in 2010. H.R. 2824 reinstates those rules. It also provides for a 5 year implementation period of the new rules and prohibits the Department of the Interior from drafting any new regulations to protect streams from coal mining waste during that timeframe. I am sure you are not surprised that the Obama Administration has stated that H.R. 2824 will be vetoed. I voted NO. H.R. 2824 passed and the entire vote is recorded below:

National Monuments

On Wednesday the House considered H.R. 1459, Ensuring Public Involvement in the Creation of National Monuments Act. This legislation amends the Antiquities Act of 1906 to make it more difficult for Presidents to designate historic or cultural sites as national monuments. H.R. 1459 requires all proposed Presidential National Monument designations that are larger than 5,000 acres to also be approved under the National Environmental Policy Act (NEPA). It’s worth noting that much of the House’s recent efforts with respect to NEPA have involved limiting its scope. H.R. 1459 takes the opposite approach which is nothing more than an effort to limit the ability of Presidents to establish landmarks through the Antiquities Act. I voted NO. H.R. 1459 passed and the entire vote is recorded below:

Ukraine

Yesterday the House considered H.R. 4278, to Support the Independence, Sovereignty, and Territorial Integrity of Ukraine. The legislation is a combination of sanctions and support in response to Russian annexation of the Crimean peninsula. It is part of Ukraine, a nation whose territorial integrity Russia, along with the United States and the United Kingdom, pledged to respect in 1994 when Ukraine gave up its Cold War nuclear arsenal. H.R. 4278 expresses support for recent Executive Orders imposing sanctions on Russia and on those participating in violence and human rights abuses in Ukraine. H.R. 4278 also supports democracy in Ukraine. It provides assistance to the government and law enforcement to enhance security as well as protect human rights. I voted YES. H.R. 4278 passed and the entire vote is recorded below:

What’s Up Next Week

The next House votes are scheduled for Tuesday April 1st. The House is expected to consider H.R. 2575, the Save American Workers Act and H.R. 1874, the Pro-Growth Budgeting Act.