Marino Statement on Financial Institution Bankruptcy Act
Washington D.C.—Congressman Tom Marino (PA-10) issued the following statement after a hearing in the Subcommittee on Regulatory Reform, Commercial and Antitrust Law regarding H.R. 2947 – the Financial Institution Bankruptcy Act of 2015 (FIBA):
“As America approaches the fifth anniversary of Dodd-Frank we have plainly seen the damage caused by this legislation and the uncertainty that remains in our financial system. Today, my colleagues and I examined the Financial Institution Bankruptcy Act, which is the most positive and significant step toward ensuring a healthy and prosperous financial system. We are seeking to end the ‘too big to fail’ modus operandi as well as the susceptibility for financial institutions to look towards the treasury and taxpayers for bailouts.
We heard excellent testimony from experts in the financial industry and I thank them for their willingness to share their suggestions regarding this important legislation. What remained abundantly clear after this hearing was the ever-pressing need to implement reforms which work efficiently with the fluidity of our markets instead of impairing them.
FIBA is a meaningful solution. It is a stabilizing force which repairs processes for bankruptcy and brings some much needed predictability to the way in which institutions navigate financial hardships.”
Congressman Marino’s opening remarks a Chairman of the Subcommittee are below:
Last congress, the “financial institution bankruptcy act” was reported favorably by this committee and passed the house under suspension of the rules.
This week, the legislation was reintroduced, and today, we build on last year’s record by further examining the bill.
In the wake of the financial crisis of 2008, congress enacted the Dodd-frank Wall Street reform and consumer protection act.
That legislation was intended to address, among other things, the potential failure of large, financial institutions.
While the Dodd-frank act created a regulatory process for such an event, the act states that the preferred method of resolution for a financial institution is through the bankruptcy process.
However, the Dodd-frank act did not make any amendments to the bankruptcy code to account for the unique characteristics of a financial institution.
The legislation before us today fills that void.
The financial institution bankruptcy act is the product of years of study by industry, legal and financial regulatory experts
As well as bipartisan review over the course of three separate committee hearings last congress.
The legislation includes several provisions that improve the ability of a financial institution to be resolved through the bankruptcy process.
It allows for a speedy transfer of a financial firm’s assets to a newly-formed company.
That company would continue the firm’s operations for the benefit of its customers, employees, and creditors, and ensure the financial stability of the marketplace.
This quick transfer is overseen by, and subject to the approval of, an experienced bankruptcy judge, and includes due process protections for parties-in-interest.
The bill also creates an explicit role in the bankruptcy process for the key financial regulators.
In addition, there are provisions that facilitate the transfer of derivative and similarly-structured contracts to the newly-formed company
This will improve the ability of the company to continue the financial institution’s operations.
Finally, the legislation recognizes the factually and legally complicated questions presented by the resolution of a financial institution.
To that end, the bill provides that specialized bankruptcy and appellate judges will be designated in advance to preside over these cases.
The bankruptcy process has long been favored as the primary mechanism for dealing with distressed and failing companies.
This is due to its impartial nature, adherence to established precedent, judicial oversight, and grounding in the principles of due process and the rule of law.
We are here today as part of an effort to structure a bankruptcy process that is better equipped to deal with the specific issues rose by failing financial firms.
As an original cosponsor of the bill, I look forward to hearing from today’s expert panel of witnesses on the merits of the financial institution bankruptcy act and whether any further refinements to the bill are necessary.”