Announcer: Please welcome
Chairman of the California Bankers Association,
and President and COO
of Montecito Bank & Trust, George Leis.
(upbeat music)
-: Well, thank you.
And I am, I can't tell you how delighted I am to be here
because I have the pleasure
of introducing my fellow Californian,
Congressman Maxine Waters.
Representative Waters is now in her 17th term in the House
and is the top Democrat
on the House Financial Services Committee.
You know, Maxine has played a role
in almost every single major banking bill
to clear Congress in recent years,
and she has so much more to do.
Representative Waters will share her outlook
on recent events in banking,
and then we'll talk about the prospects
for bipartisan cooperation in the 118th Congress.
And then, she will join ABA's Kirsten Sutton
who will join her for a conversation right here on stage.
Please, let's give a big round of applause here.
Welcome back to the ABA Washington Summit stage
Representative Maxine Waters.
(audience applauding)
(upbeat music)
-: Good morning, everyone.
Let me thank George Leis for that very kind introduction.
And of course, his introductions, whatever he does,
is always correct.
It's always right because he's from California.
And so, I'd like to thank him very much.
President and CEO, Rob Nichols,
I'm delighted to be here with you all once more time.
And so, it's always great to be here with you.
And I know that the recent collapse
of Silicon Valley Bank and Signature Bank
has been on everyone's minds.
And I'd like to just touch on those events,
and talk about a few of my priorities for this Congress.
My staff and I have been working around the clock
to get to the bottom of what led to the collapse
of Silicone Valley Bank on Friday, March 10th,
and then Signature Bank on March 12th.
These were the second and third largest bank failures
in United States history,
and we saw the largest bank run
with 42 billion withdrawn from Silicone Valley Bank
in one day before they failed.
I was pleased with the steps taken by Biden's team
at Treasury, the FDIC, and the Fed
to protect small businesses and workers
all around the country
by ensuring that depositors had access to their funds
that following Monday.
Since Silicon Valley Bank's collapse,
I've been organizing briefings
with the FDIC, Federal Reserve Treasury,
the Federal Housing Finance Agency,
and the Federal Home Loan Banks.
One of the more disturbing reports
coming out of the collapse
was the role of Silicone Valley Bank's executives
in the bank's failure last week.
President Biden called on Congress
to strengthen authorities for clawbacks
when executives break the law.
And in response,
I announced that I am working on legislation
to strengthen those authorities.
And in the meantime,
I called on federal agencies
to use the tools that they have
to hold executives accountable for any unlawful behavior,
and to work on finalizing long overdue rules
under Section 956 of Dodd-Frank.
which would reform incentive-based compensation
for executives.
Last weekend, the FDIC identified a buyer
for Signature Bank,
but still has yet to identify a buyer
for Silicone Valley Bank.
In 2021, Silicon Valley Bank
had signed an $11 billion community benefits agreement
with community groups in California and Massachusetts
to increase affordable housing, mortgage lending,
small business loans, and community development investment
in those states.
But, the bank's failure
has halted some investment projects
in California.
And so last week, I urged the FDIC
to ensure that the bridge bank it operates,
as well as any new buyer it identifies
will continue to honor this commitment
to California's communities, including those in my district.
Additionally, while the Biden administration's bold actions
have helped restore confidence in our banking system,
a few banks continue to face challenges
that we are closely monitoring.
Large banks work with the Biden administration
to provide $30 billion in deposits to First Republic Bank.
Though the bank appears to still have challenges,
and the challenges we've seen
are not limited to the US banking systems.
We saw Credit Suisse nearly fail over the weekend
before it was brought by UBS,
an arrangement organized by the Swiss government.
So I'm working closely with Chairman McHenry,
and last week we announced that our committee
will be holding a series of bipartisan hearings
to examine the recent bank failures
starting with hearing next Wednesday
with senior officials from Treasury, the Fed,
and the FDIC testifying.
We also sent a letter to GAO
requesting they examine a number of angles
of these developments,
including a role that federal home loan banks have played
in providing advances to member banks that needed them.
My hope is that we can identify what regulatory,
supervisory, or management and other failures
may have contributed to these events,
and then work to quickly strengthen our laws
to ensure this does not happen again.
This includes reforms to strengthen deposit insurance
as well as strengthening enhanced prudential standards
in an appropriate way.
And so, I look forward to hearing your feedback
on these and other reform ideas.
Before I close,
I want to briefly mention a few other priorities.
As you all know,
diversity and inclusion remains a great priority of mine.
When I was Chair, I established a subcommittee
on diversity and inclusion,
and the committee held a number of hearings
exploring the trends in diversity and inclusion
within the banking industry.
Commitments made by the banks
to serving diverse, underserved communities,
as well as ways to promote diversity and inclusion
among federal agencies.
Despite the fact that the chairman,
that is Chairman McHenry,
eliminated the diversity subcommittee,
I'm committed to finding ways
to continue that work in this Congress.
This includes working to uplift the invaluable work
of Minority Depository Institutions,
commonly referred to as MDIs,
and Community Development Financial Institutions,
that is CDFIs,
urging both the traditional bank sector
and federal banking agencies
to provide further support to these critical, diverse,
and mission-driven community financial institutions.
So I'm looking forward to joint final rules
by the FDIC, the Fed, and the OCC
on strengthening the Community Reinvestment Act.
While we may not agree on everything,
I think we can all agree
that the strongest CRA rules can expand lending
to underserved communities,
and ensure all financial services providers
are prioritizing service to low-to-moderate income bars.
Also, I hope we can agree
that there's no place for redlining
in today's banking system
just as there wasn't in 1977
when Congress first passed the CRA.
So, I thank you for having me,
and I understand that we are gonna have
a little question and answer session,
and so I look forward to that.
Again, thank you so very much,
and welcome back to Washington, DC.
(audience applauding)
-: Ranking Member Waters,
it is such a pleasure to be sitting up here with you.
And before we get into some
of the very serious policy issues
that are before your committee today,
I just wanted to acknowledge before this group
that Ranking Member Waters
is not only the first African-American Chairman
of the House Financial Services Committee,
also the first female Chairman
of the House Financial Services Committee,
and African-American female chairman.
So, just an incredible leadership role that you've played
serving in your 17th term in the House.
So, a lot of experience that you're-
(audience applauding)
Yes. Bringing to bear.
So, thank you for being here with us.
Thank you for the opportunity to ask you a few questions.
You touched in your comments on committee oversight,
and that already Senate Banking Committee,
House Financial Services Committee
will be holding some oversight hearings
of these recent bank failures next week.
As you are going into those hearings,
what is top-of-mind for you?
What is it that you're looking to hear
from these regulators?
-: Thank you very much for that question.
I think we are going to have to do a deep dive
into what has taken place with Silicone Valley Bank,
and with Signature.
I've been learning a lot about Silicone Valley Bank,
and the fact that they were the go-to bank
for a lot of our startups.
And it appears that the startups have difficulty
with some of the traditional banks
with their new ideas, and their creativity,
and artificial intelligence,
and all that they're working with.
And so Silicone Valley became the welcoming bank
working with venture capitalists,
and they were able to provide funding.
But the other interesting thing with Silicone Valley Bank
was 94% uninsured.
And the way that we have handled that,
and by the way, let me just say
that the way that the FDIC and the Fed, the Treasury,
the President, the way that they handled this
should be a message to everybody
that your government is at work,
and can solve problems, serious problems,
if they're working together.
And this was a great demonstration of that.
And I was very pleased about the way in a matter of hours
they were able to come to agreements,
particularly to expand coverage to the uninsured,
and to ensure that jobs were not lost,
and that the payrolls were met.
And so, I'm looking deeply into what does it mean
to have 94% of your depositors uninsured?
What does it mean for startups
to have to basically focus on one bank in Silicone Valley
in order to, you know, get the funds that they needed
in order to pursue these creative efforts.
And of course,
I'm looking to see whether or not
all of the oversight agencies, whether the Feds, et cetera,
really did miss the opportunities to see what was happening,
and to know what was going on with that balance sheet,
and to be able to correct things
before they got to the point of collapse.
All of that, everything.
-: Absolutely. -: Yes.
-: So, first hearing next week
sounds like probably many, maybe many hearings to come.
A lot of ground to cover.
Another question I had for you,
so another fun fact, actually, about Ranking Member Waters,
she actually served at the helm
of all of the, it's gone back and forth,
between five and six subcommittees for financial services.
And I think you might be the only member of that committee
who's actually been in a leadership role
at every one of those subcommittees.
So you were obviously around during 2008, 2009
leading up to the, the financial crisis, the housing crisis.
So bank failures aren't new to you.
I am curious how that experience
being on the committee during that time
when the government did not have
some of the tools that it has now,
how did that experience
of watching those events unfold
impact your leadership, your perspective,
on these two recent bank failures?
Very different situation now
where we're looking at some distinct institutions,
but did your experience in '08 and '09
have an impact on your approach
with these recent bank failures?
-: That's an interesting question.
Yes, in so many different ways.
First of all, I identified just a moment ago
that diversity and inclusion was something
that was top-of-mind that I'm very concerned about.
And that's why I created the subcommittee.
Well, that came out of Dodd-Frank Reform, OMWI.
We created something
for all of our federal financial services agencies
to identify people who were began to pay attention
to hiring and contracts, et cetera.
And it was out of that experience
that my diversity and inclusion subcommittee was created.
In addition to that,
I had the opportunity to work
with one of the finest members of Congress,
a very, very brilliant individual,
and that was Barney Frank.
And my years with him,
and then serving on the committee during that time
was a great learning experience for me.
And of course, I began to really understand
how important it is to manage risk, and how that works.
And I also believe
that even though oftentimes,
as happened during the Barney Frank years,
and during the Dodd-Frank reforms,
there was a lot of discussion about deregulation.
And so, I think that we are all going to have to look
at regulation and deregulation,
and really determine what can we do
to ensure that banks are able to operate profitably,
and be able to serve our communities
in a fashion that does not hurt their bottom line.
But at the same time,
don't be afraid of regulation
that's going to avoid the kind of collapse that we just saw.
Don't be afraid of saying, "You know,
we don't particularly care for this,
but I can work with this."
And we have got to ensure
that we don't have a collapse
that would create the kind of contagion
that we were all afraid of just a few days ago.
And that we don't create the kind of systemic failures
that would cause what happened 2008.
So I learned an awful lot,
and I believe that we can work this out,
that we can ensure that the banks can operate
in fashions that makes good sense for them to be in banking.
But at the same time,
always think about the important role that they play
in our society, in our economy,
and be poised, always, to avoid collapse and failure.
-: He was certainly a strong chairman,
and he kept everyone on their toes.
(Congresswoman chuckles) I do, I remember that.
Last question for you.
So, we have bankers in the room,
we have a lot of bankers who plugged in virtually.
We have a lot of bankers that are up on Capitol Hill.
And for some of the bankers in the audience,
this may be their first time coming to DC
and engaging their federal lawmakers for the first time.
So question for you, again,
as someone who has has spent so much of your career
as one of the stakeholders
that we would be trying to reach in our advocacy,
what advice do you have for bankers
as they're preparing to meet with their elected officials
to help them have effective and meaningful meetings
to build a relationship over the long term?
Any advice that you have have for our bankers here?
-: Well, let me just say this.
Before I give the bankers advice,
I wanna give the members of my committee some advice,
and have an open door.
Have an open door,
and allow the bankers to come in,
ask questions, challenge, whatever.
We may not always agree,
but I think it's so important for our consumers,
and our bankers, whatever, our constituents,
to have access to the legislators
who are making big decisions about their lives,
their future, their banking, et cetera.
So, that's first thing.
-: If you can go back and tell them all that,
(Congresswoman laughs) we would really appreciate it.
And I also just have to compliment your incredible staff.
When I was a staffer working with them,
and even being in other roles working with them,
the door has always been open.
And it's always been a welcome conversation.
And even when there were disagreements,
we can disagree really respectfully,
but there's a desire to work toward finding common ground.
So it's really a compliment to you and your staff.
But we appreciate that one.
We'd love for you to tell all the members of your committee
that that open door is really helpful.
But any other words of guidance or advice?
-: Well, thank you very much. So, that's important.
So, with encouraging more open doors as we have,
I want the bankers to feel free to knock on those doors,
and to request a meeting.
Oftentimes they will say, "We're busy."
Of course, we're busy all the time.
But when you come to town,
I think we owe it to you to allow access
so that we can tell you what we are thinking,
what we are thinking about legislatively.
The other thing I want bankers to know is this,
except for my committee,
many of those who represent them
think they don't know enough about banking and finance
to come in and have a conversation.
And so I think the bankers should go,
and the bankers should do everything that they can
to make it easier for them to understand
some of the basics of banking.
And so when we are talking about, maybe,
what is going to come up in terms of regulations,
please explain to the members your position,
and why you have that position,
and give them something to think about,
and then to come to us and ask questions about.
So I think it's a two-way street.
Open-door, and then engaging,
and not thinking, "Well, I'm talking to someone
who's not on the banking committee necessarily."
But they're gonna have a vote if it gets to the board.
-: That's right.
A lot of interest in banking issues right now.
-: That's right. -: As we all know.
So, such great advice, and thank you again.
It's just such a pleasure to have you here.
Please join me in thanking Ranking Member Waters
for being here.
(audience applauding) -: Thank you. Thank you.