My Congressman is Derek Kilmer--one of the 35 Democrats who voted "yes" to pass H.R. 37 and then one of 29 who voted "yes" the second time. This is the bill creatively called the "Promoting Job Creation and Reducing Small Business Burdens Act." Under the extension is his letter explaining his vote.
During Derek's recent meeting in Port Townsend, he offered an extensive rationale for this vote that left many people thinking he could have been right. His Town Hall presentations are sprinkled with folksy anecdotes about his daughters and "happy talk" -- all to put his constituents at ease and to reenforce their initial "like." Thus, few want to challenge him or hold him accountable even when they question his votes and positions (or non-positions).
As one of the skeptics who tries to watch his votes, I've come to wonder at the source for this rationale and want to invite others to comment and check the reasons other reps have given for their votes. Is this a seriously thought out position? Or is this a lobbyist provided set of talking points? Inquiring constituents want to know.
There is a Facebook page, Legislative Watch CD6 WA, where audio of this event may be posted.
Thank you for contacting me about H.R 37, the Promoting Job Creation and Reducing Small Business Burdens Act. I appreciate you taking the time to share your thoughts with me.
There has been a lot of overheated and misleading rhetoric about H.R. 37, so I want to be clear that I am a strong supporter of the Dodd-Frank Wall Street Reform and Consumer Protection Act and would never vote to undermine laws that keep consumers safe. Having worked in economic development in Tacoma during the 2008 financial crisis, I saw first-hand the very real impacts that excessive risk taking and a lack of oversight and accountability had on businesses and families across our region. This crisis was fueled by Wall Street and hurt businesses on main street and families in towns in our region and throughout the country.
I understand your frustration with those in the financial industry that contributed to our economic collapse and the impacts it has had on our community. I'm frustrated too.
Not only do I support the Dodd-Frank Wall Street Reform and Consumer Protection Act, I've actually fought back against repeated efforts to undermine it. I've voted against bills that would have made it harder for the Consumer Financial Protection Bureau, the Federal Reserve, and the other financial regulatory agencies to protect consumers and ensure the stability of the financial system.
There are folks leading Congress right now that want to repeal Dodd-Frank. They are wrong and I oppose them. That said, where there are common-sense tweaks that can be made to the law that represent legitimate reforms that help it work better, I think we should be willing to consider them.
With that in mind, let me take a moment to provide some background on H.R. 37. This legislation is composed of 11 separate bills that were previously introduced over the course of the past two years. By many accounts, this bill contained modest reforms and technical corrections. What's more, it's important to point out that the 11 bills that comprised H.R. 37 were previously bipartisan.
In fact, when these bills were considered either by the House of Representatives or the House Financial Services Committee, nearly all received strong support from both Democrats and Republicans.
· H.R. 634; passed the House 411-12
· H.R. 677; passed committee 50-10
· H.R. 801; passed the House 417-4
· H.R. 2274; passed House 422-0
· H.R. 742; passed House 420-2
· H.R. 3623; passed committee 56-0
· H.R. 4164; passed committee 51-5
· H.R. 4200; passed committee 56-0
· H.R. 4569; passed committee 59-0
· H.R. 4571; passed committee 36-23
· H.R. 4167; passed House by voice vote
Of all these bills, the most controversial one was H.R. 4571, which would revise the amount of stock-based compensation that private companies, including small and medium-sized businesses around the country, can provide to their employees. Since that threshold hasn't been updated in 16 years, there was some debate about what the appropriate level should be for the new threshold. This provision was lowered when it was included in H.R. 37 and is no longer considered controversial.
Some of the criticism of this bill has centered on a provision related to the so-called "Volcker Rule." This rule is designed to prohibit banks from engaging in speculative trading. Specifically, the rule bans banks from putting their own money at risk when trading financial instruments to increase profits. It also limits the relationship banks can have with hedge funds and private equity funds.
I support a strong Volcker Rule and will continue to fight against efforts to undermine it and other critical protections for our financial system, consumers, and the economy.
As part of the Volcker Rule, banks have to sell off their ownership interest in various kinds of financial instruments. Since these financial instruments were not defined by law, federal regulators have had to determine which kinds of products banks could hold and which ones would have to be sold.
When the final version of the Volcker Rule was issued, one of the financial products that had to be sold was what is known as a collateralized loan obligation (CLO)—a kind of security backed by a pool of various loans. These products are actually pretty commonly held by banks – and not simply by large banks on Wall Street but also by the community banks in our region. Many small community banks own these products as a way to help reduce their risk and increase the amount of capital they can lend to families and businesses.
One of the provisions in H.R. 37 would extend the deadline for selling off this kind of financial instrument for an additional two years. I don't think giving banks two more years to sell off these assets undermines the Volcker Rule or Dodd-Frank. In fact, I think giving banks more time to get these assets off their balance sheets reduces the risk that banks are forced to dump these assets in a fire sale. Forcing small and medium-sized banks to sell off these financial products no matter the price could cause real harm to their balance sheets, sharply limiting the ability of families and businesses to borrow money and creating significant financial instability.
That same concern is what drove financial regulators to fully extend the deadline for banks to sell off CLOs for three years, the maximum allowed under current law. It seems reasonable to me that an additional two-year extension will help reduce the uncertainty associated with this rule.
So why the controversy? The fact is this is a bill that is, substantively, similar to a bill that was backed by most Republicans and Democrats just four months ago. Some Democrats opposed H.R. 37 because it was brought up in an expedited manner early in the new Congress. In addition, though, I sense that there is frustration by many of my colleagues at the refusal of the majority party in the Congress to do more to address Wall Street abuses and reign in economic inequality. I share that frustration but disagree that opposing this reasonable legislation is the right way to signal that frustration. As someone who supports Dodd-Frank, I fear we undermine common-sense regulation and fuel those who want to repeal the whole thing if we treat this law as something written on stone tablets.
The House considered H.R. 37 on January 7, 2014 under an expedited process that required support from 2/3rds of voting members for passage. The bill came short of this mark and failed 276-146. It was considered again under regular order on January 14, 2014 and passed in the House with my support by a vote of 271-154 and is now pending in the Senate.
As the federal regulators work to fully implement all the provisions of the Dodd-Frank Act, I will continue to closely monitor this issue and keep your thoughts in mind as Congress furthers the debate on how to best protect our nation from another financial crisis. Thank you for reaching out. It is an honor to serve as your representative.
Sincerely,
Derek Kilmer
Member of Congress